14 Aug 10 Has Obama Mortgage Relief Gone Too Far?
The Obama administration funded the Home Affordable Refinance Program, Home Affordable Modification Program, Hope for Homeowners and now the Emergency Homeowner Loan Program. Most of these tax-payer funded mortgage-bailout programs failed miserably. However, the Home Affordable Refinance Program,initiatve did help underwater homeowners with 125% mortgage refinancing , but only a small percentage of homeowners met th Fannie Mae and Freddie Mac loan requirements. Rates on fifteen-year loans dropped to 3.92% this week and the thirty-year rates fell to 4.44%. Nationwide reported that economist have forecasted that approximately 20 million homeowners will have an underwater mortgage at some point in 2011. The Fed announced this week they it would use the proceeds from Fannie Mae and Freddie Mac portfolio of mortgage-backed securities to purchase government debt.
FHA refinancing requirements are getting more difficult for the average borrower as HUD is said to be tinkering with a minimum credit score of 500. Lenders are bracing themselves for tighter FHA guidelines in the coming year as HUD moves to rebuild the reserves for the FHA insurance premiums. Read the original article online > Relief for Refinancing with Short Refinance and Emergency Homeowner Loan Programs
01 Jul 10 FHA and VA Get Exemptions in Finance Reform Bill
According to a report from the American Banker, the Federal Housing Administration and the Department of Veterans Affairs were awarded exemptions in the finance reform bill that passed last week. From a loan origination perspective, VA and FHA lenders would be getting an unfair advantage. The reality is that in today’s mortgage market loan companies are offering FHA or VA or both loan products so will this have a dampening effect? This could pose more of a risk of defaults on FHA and VA home loans. So FHA and VA home loans Former MBA chairman David Kittle thinks FHA is getting a pass from Congress in this bill.
How will the Exemptions Effect the Non Government Mortgage Companies?
Under the final mortgage reform bill, federal banking agencies, the Securities and Exchange Commission, and Federal Housing Finance Agency will draft rules establishing underwriting standards and allowable product features for these fully documented loans. Qualified home loans also have to meet a new and tougher “ability to repay” standard in the bill along with a 3% limit on points and fees and a separate 2% limit on bona fide discount points. Regulators have the flexibility to set risk-retention requirements lower than 5% for residential loans that don’t meet the qualified mortgage test.
Balloon, negative amortization, and most interest-only notes will be excluded from the definition but debt-to-income ratios and verification practices must be defined by regulators and could change. The bill, as expected, gives little boost to a revival of the private-label securitization market. “Time and time again we keep hearing that we need the private sector to jump in, yet all the regulations that are being passed are keeping them out of the game, on the bench, on the sidelines,” said Sylvia Alayon, senior vice president of national operations at due diligence firm Capital Markets Assessment Corp. “We do need the private sector because many loans, like jumbo loans, can never be absorbed by the government agencies, and they represent a significant part of the market.”
Still, mortgage insiders were relieved that the mortgage reform bill will not force them to retain risk on all securitizations, regardless of loan characteristics, as in the initial language they had lobbied against. “It’s nice to win one,” said Lewis Ranieri, co-inventor of the mortgage-backed security. Read the original mortgage reform article online. > FHA Loan Program is Exempt from Risk in Mortgage Reform Bill
20 May 10 Should Fannie Mae and Freddie Mac Unify?
In a recent Mortgage Rates Pulse article, they re-stated the obvious — The mortgage industry continues to struggle. Even with 30-year fixed rate mortgage programs below 5%, we can’t fix the mortgage debacle simply by inducing another refinance boom. Most mortgage executives would concur that regulatory reform for mortgage financing is a “done deal” with this democratic controlled Congress and Senate. Yes we all agree there needs to be some checks and balances installed to prevent future home finance melt-downs, but the Obama Admin is out of control with their shallow and short-sided mortgage relief efforts. Most of the government initiatives look good on paper, but lack the inner back-bone to succeed. Read the entire Mortgage Rates Pulse article > Suggestions for Fannie Mac Mortgage Reform.
30 Mar 10 Obama Expands Home Affordable Modification Program
The Wall Street Journal reported that most the largest mortgage lenders carry hundreds of billions worth of home equity loans on their books. A spokesman for the California Mortgage lender, Nationwide Mortgage said “Most of the second mortgages that are defaulting are from the 100% subprime combo loans, also known as 80-20 loans.” These equity loans had high adjustable rates and many even had large balloon payments.
As home prices have nationally declined by almost 30%, these second mortgage liens are worthless in the case of a foreclosure. Second mortgage loans are usually wiped out completely during a foreclosure if the price has decreased more than 20%. Read the original article online. Many believe that Obama pushes the mortgage bailout agenda rather than correcting the core lending problems. Read the original blog post > HAMP Helping Second Mortgage Lenders?
