Freddie Mac Archives Page 2 Of 2 – Refinance – Mortgage Refinancing Rates And Information

Mortgage Modification Sponsored By The Government, What Is Harp

August 1st, 2009 No comments

HARP, the government Home Affordable Refinance Program has consistently grown and expanded the help provided as more power and finances are invested in this program.
If you are in danger of losing your home or are struggling to make payments HARP could provide you with the break you need to get back on your feet.
If you are in that situation you probably have many questions you would like answering. How can I know if I am eligible for aid under HARP? How do I know if I will actually benefit from a HARP loan refinance? Or probably the scariest, I owe more on my property that it is worth, do I still qualify for a refinance with HARP?

What are the requirements to qualify for HARP?
1.)   Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Most people don’t actually know if this is the case and unfortunately in many of the hardest hit areas by the economy in the United Sates Freddie and Fannie don’t guarantee a large percentage of the loans. For you to find out if your loan is guaranteed or owned by Freddie and Fannie you can either contact your mortgage provider or find out at their respective websites.
For Fannie Mae 1-800-7FANNIE (8am to 8pm EST). www.fanniemae.com/loanlookup . For Freddie Mac contact -800-FREDDIE (8am to 8pm EST)
o   www.freddiemac.com/mymortgage
2.)   The amount you owe on your FIRST mortgage cannot exceed 125% of the value of your home. This figure has been increased a few times in an effort to include those that really need the HARP program.
3.)   You must be current on your mortgage payments. Current means not having being later than 30 days on your payment in the last months or never having missed a payment if you have had the loan for less than 12 months. It seems strange that a mortgage aid program will only allow people that are “current” on their payments to participate, however the idea of the program is to provide long term help allowing homeowners that can reasonably rearrange their finances to pay their mortgage not provide emergency help to people who simply cannot meet their mortgage payments.
4.)   The loan modification must improve the overall long term affordability of the loan. This can me an different things depending on the mortgage. For instance if you switch from a variable interest or ARM mortgage to a fixed interest mortgage your initial payments might rise a little but your long term stability and ability to pay for your mortgage may increase.

How can you know if you a HARP loan modification will benefit you? The key is to understand the cost and benefits of your loan and to get that information you need to documents, a “Good Faith Estimate” and a Truth in Lending Statement”. The two disclosures will spell out for your new interest rate, mortgage payments, fees and other expenses. You can then compare the “new deal” with your current mortgage to assess if it is actually beneficial for you.

I hope this article has answered some of your questions on HARP. However if you are thinking of applying for help you have probably got many more questions, the best thing you can do is visit HARP’s website at www.makinghomeaffordable.gov where you will find these and other questions answered.

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Categories: Economy, Interest Rates, loan modification, Mortgage's, Refinance Tags: 12 Months, Break, Contact, Current, Economy, Exceed, Fannie Mae, Fanniemae, First Mortgage, freddie mac, Harp Program, Loan Refinance, Loans, Mortgage Payments, Mortgage Program, Mortgage Provider, Program 3, Strange, United Sates

Obama’s Mortgage Refinancing Aid, Who Really Benefits

July 16th, 2009 No comments

Obama’s Mortgage Refinancing Aid, Who Really Benefits?

Obama’s administration latest efforts to protect and aid family’s that cannot pay their mortgages and are in serious risk to foreclose aims to help 9 million home owners and further measures intend to provide information and advice to home owners on mortgage refinancing and on mortgage options to home buyers.

What are the effects of these measures and who really benefits from them?

Obama’s refinance and modification program could help as we said up to 9 million homeowners to reduce their monthly payments to an affordable level. The program does not stop there, aiming to provide 5 million homeowners with aid through government owned Fannie Mae and Freddie Mac as well as earmarking $75 billion to prevent foreclosures.

What has happened up to now? Up to date it seems (reliable stats are still to be produced due to the lack of a tracking system) around 200,000 borrowers have received the option for trial modifications according to the U.S Department of Housing and Urban Development, HUD.

This is great news for the 200,000 that benefited but still a far cry from a real solution. It is early days to bury the program but the predictions of the Mortgage Bankers Association are not promising. The MBA says that the government’s expectations are unrealistic and that lenders will only make $2.03 trillion from mortgages this year, not even close to the associations forecast for this year which was $750 billion more than the estimated amount.

Why is this the case when the U.S government is investing hand over fist in mortgage backed securities and printing money like it’s going out of fashion to invest in banks. The banks will say that the increase in interest rate is negating the government’s efforts while others blame the fact that banks have little incentive to speed up the financial aid procedures and that there is not enough control from the government. It does seem like banks are getting a pretty good deal being provided with cash to invest in government backed mortgages, a win-win situation for the lender.

On the other hand the borrowers that need the aid to continue living in their home are facing long procedures that stretch for months and months with no guarantee of a clear answer after the ordeal.

Another glitch in the mortgage refinance aid is that it seems to ignore those that are worse off with upside down mortgages. Although the latest aid packages have included mortgages that are up to 125% of the current value of the house this only applies to Fannie and Freddie backed mortgages that do not have a very large presence in the worst hit areas like California and Las Vegas to mention two.

Obama’s Mortgage Refinancing Aid, Who Really Benefits

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Builders, Realtors attack new regs on home appraisal

July 14th, 2009 No comments

A bill in congress would suspend a set of rules designed to reform the relationship between mortgage brokers and appraisers. The Home Valuation Code of Conduct, which went into effect on May 1, prevents lenders from directly picking appraisers for Fannie Mae and Freddie Mac secured mortgages. This was aimed at eliminating conflicts of interest suspected of inflating home values. Under HVCC lenders must contract with third parties known as appraisal management companies which then select the appraisers.

The National Association of Realtors (NAR), The National Association of Home Builders (NAHB) and other groups say HVCC appraisals under-value properties. In a release, the NAHB said more than a quarter “of builders are seeing signed sales contracts fall through the cracks because appraisals on their homes are coming in below the contract sales price.” HVCC critics say this is because lenders now have to use lowest bidder appraisers allegedly unfamiliar with local market conditions. Another interpretation is that the appraisers are setting prices that show actual – as opposed to hoped for – market conditions.

It is interesting to note that the complaints are carefully worded to imply the problem is with the appraiser and not with the seller’s pricing. As the NAHB put it: “Of those who are reporting appraisal problems, 54 percent said that the appraisal amount was actually less than the cost of building the home.” This is very different from saying the appraisal was wrong. Instead the claim is that the property is no longer worth as much as what it cost to build it. Is that really any surprise?

The NAR used some incredibly artful phrasing in a release: “Among Realtor® respondents obtaining an appraisal for a client, 55 percent reported a perceived decrease in appraisal quality.” (Emphasis added) It is also worth noting that the appraisers are protesting the new regulations because the management companies are taking a chunk of the fees that used to go to the appraisers. They say that paying lower fees means using “appraisers from distant locations with less experience and training, or more pointedly: those who will work for less."

In response to these complaints Freddie Mac issued rules clarification stating appraisers "must be familiar with the local market,” choose "appropriate comparable sales," and certify they are "most similar" to the property being appraised.

We do not require appraisers to use Real Estate Owned (REO), foreclosure or short sales. However, if the appraiser determines that these are representative of the properties available to typical purchasers for the market in which the property is located, appraisers must consider their use.

(PDF of letter available here)

So, yes the appraisers do have to consider all market conditions and not just those that push home prices up.

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Freddie Mac educates borrowers via YouTube

July 9th, 2009 No comments

A new video posted on YouTube on Wednesday shows borrowers how taking the time to gather a few financial documents before calling a mortgage servicer can speed the process of determining eligibility and applying for loan modification under the Making Home Affordable program or Freddie Mac’s other workout initiatives.

“America’s servicers are handling an extraordinary volume of calls from distressed borrowers seeking an Home Affordable Modification under the President’s program,” said Ingrid Beckles, senior vice president of default asset management at Freddie Mac. “By taking a few moments to gather these documents borrowers can help their servicer understand their financial situation and reduce the need for repeat calls.”

The 2-minute video, “Stop Foreclosure: Documents Your Lender Needs to Help You,” walks late-paying borrowers through which documents they should have on hand when they call a servicer to discuss loan modification. According to the video the key documents borrowers should have when calling their servicer include:

Most recent monthly mortgage statement;
Pay stubs or other documents showing their household’s monthly pre-tax income;
Most recent tax return;
Second loan or home equity line of credit statements;
Account balances and minimum monthly payments on credit cards, car loans, student loans or other debt;
A short, concise description of the financial hardship that is causing or leading to a mortgage delinquency.

“Stop Foreclosure: Documents Your Lender Needs to Help You” can also been viewed on Freddie Mac’s YouTube channel, here it is:

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Requirements to Qualify For An Obama Mortgage Refinance Loan

July 7th, 2009 Comments off

Requirements to Qualify For An Obama Mortgage Refinance Loan

Are you in trouble with your Mortgage, Loan or would just like to take advantage of the current Government’s desire to give borrowers a break on their mortgage? If that is the case you are far from alone. Although exact figures are hard to come by because a tracker system is yet to be completed, tens of thousands of people are queuing up to sign up for Home Refinance Aid packages. As often is the case with attractive programs and offers the Devil is in the detail of actually qualifying for the Home Loan aid.

This blog aims to simplify the jargon for you and give you the “simple” facts on how to qualify for the Mortgage and Home Loan refinance aid the current administration is offering.
You must owe between 80% and 105% of your mortgage.

This has been a rather hot potato as many analysts believe that it is overly conservative and not very realistic when you take a look at the “typical” borrowers that are struggling with their monthly payments. This is the case of “underwater” borrowers that owe more than the value of their home and are well above the 105% bracket. In fact last Wednesday the Obama administration increased this bracket to 125%.

Nevertheless some commentators suggest that up to 26% of mortgage owners qualify in the United States based on this requirement alone. The same study revealed that 25% of home borrowers fall into the “underwater” category and will not qualify for refinance aid under this plan. This is too bad for areas that have been specially affected by the Real Estate crisis like California where house prices have dropped by up to 40%.

Your loan must be backed by Fannie Mae or Freddie Mac.

You have a two in three chance of falling into this category around 60% of all United States home loans are backed by Fannie or Freddie. However most of us don’t know if that is the case or not. The fastest way to find out is to phone your loan provider.
Have a “conforming” mortgage.

What does “conforming” mean? It means a loan that is below the maximum set by the refinance aid program. In many areas the ceiling on refinance aid is set at $417,000. A special allowance is provided for high cost areas like New York, San Francisco and similar areas where the maximum is around $625,000. This is still rather restrictive for high cost areas like San Francisco where the average loan is closer to $725,000.

Do you qualify under these requirements? Whatever you think is the answer, if you need aid would recommend you contact your loan provider and ask for their professional opinion. The Mortgage Refinance program is constantly changing and expanding to include as many borrowers in need as possible.

The best advice you can follow is to start by getting your paperwork together before you contact your loan provider. This means putting together a file with your your driver’s license a copy of your Social Security card, two of your most recent pay stubs, your most recent mortgage statement, the past two years of your W2s, and past two months of bank statements from all accounts. This will speed up your request and allow your loan providers to have an accurate picture of the kind of customer you are and if you qualify.

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