Kelly is on the beat:
http://www.voiceofsandiego.org/articles/2009/07/01/survival/199obama070109.txt
An excerpt:
The plan announced in February was initially offered to homeowners whose mortgages were worth 105 percent of their homes’ current value.
Now the option to refinance will be extended to homeowners who are even further underwater.
Today, HUD Secretary Shaun Donovan announced in Las Vegas that the plan will expand to include those 125 percent underwater on their mortgage but still current on their payments.
More than 30 percent of all homeowners in San Diego County who have mortgages are underwater. Note: We’re not talking about the loan modification, payment-reducing part of the federal Making Home Affordable program here, but the option to refinance the loans if you’re underwater.
There is a catch: The borrowers’ loans must be owned or guaranteed by Fannie Mae and Freddie Mac. Both agencies have loan lookup programs (Fannie Mae and Freddie Mac) to determine whether you qualify. I’m checking to find out what other restrictions might apply to the refinancing program and I’ll let you know what I hear.
Woohoo!!! Moral hazard for everyone!
Nah, greenlander, no moral hazard because there’s no cash out, just a lower rate.
IOW, a California applicant will still be chained to his or her home forever, only the chain will be a little lighter in exchange for full recourse.
Better they should walk.
sent in by a reader looking for a house to rent:
It turns out the website was a fraud. We only got the landlord’s telephone number after signing up with a credit card, and he said the property had been rented 10 months ago and told us that ApartmentHunterz.com posts any old listings they find on the Internet and to stay away from them (good to know).
Jim, you and I have similar houses with similar circumstances. Okay, you serve better shrimp but you get the idea. We could go 125%LTV at the current 5.43% and roll the entirety into California double tax free bonds yielding 6.20%. The payments are tax deductible and the receipts are non-taxable. What do you think?
Sounds like a good idea Dawg, but no cash-out on these 125s.
What happens if the state just goes BK, flushing the whole mess down the drain?
Less than three in 10 mortgages that were modified by servicers in the first quarter of 2008 are still current, according to a new “mortgage metrics” report released by the Comptroller of the Currency. The report indicates that as loan modifications age the chance of a mortgage going delinquent again increases significantly.
The OCC found that just 29.5% of loans modified in 1Q08 are still “current and performing” while 48.2% of those modified in the fourth quarter were current.
As for mortgages modified in the first quarter of this year ā with the stated goal being home retention by the mortgagor ā almost 36% are already in some stage of delinquency, the OCC found.
Even though the relapse rate is poor, mortgage servicers are under increasing pressure to help consumers. Loan modifications by mortgage companies increased by 172% in the first quarter compared to the same period last year. Servicers initiated 185,156 new loan modifications in 1Q ā a 55% jump from the previous quarter. The report also shows that foreclosure actions in the first quarter totaled 290,900, up only 4% since the first quarter of 2008.
The 125% LTV program is encouraging 20 or 25 year terms too, at a slightly lower rate:
http://www.fhfa.gov/webfiles/13495/125_LTV_release_and_fact_sheet_7_01_09.pdf
I think the key phrase here is “still current on their payments.” It’s the first program I’ve seen that’s directly and only targeted toward helping underwater homeowners who have chosen to NOT be deadbeats and to keep their commitment to pay back what they borrowed.
Rob Dawg,
IRS Publication 936 specifies that interest on home loan can not be deducted if proceeds are invested in tax-exempt securities.
Great info and good program for those who don’t, and won’t, walk away.
While we’re at it, why don’t we encourage 40 year mortgages to help lower the payments a bit more? Or like some third world countries, how about a 99 year mortgage? If payments are all that matters and people don’t mind renting from the bank, go ahead. Everyone else, walk away. =)
I believe extending the duration of the loan is part of the program to keep DTI ratios at 31% or below. Will check…
Rob Dawg,
IRS Publication 936 specifies that interest on home loan can not be deducted if proceeds are invested in tax-exempt securities.
I did not know that and i thought i knew everything.
This still does not help those who had to move for a job, couldn’t sell the house, had to buy a 2nd house in a new city and are now reluctant landlords.
I don’t mind a lower interest rate and or a 40 year mortgage. That just means less interest per payment and more money I can throw at the principal – no? Though I supposed most who would qualify don’t think that way?
Wow, solar path out”knew” Dawg…amazing–I thought Dawg knew everything too. š
Welcome to the blog, solar path!
“This still does not help those who had to move for a job, couldnāt sell the house, had to buy a 2nd house in a new city and are now reluctant landlords.”
Or those who need Chap 7 but cannot.
“I donāt mind a lower interest rate and or a 40 year mortgage. That just means less interest per payment and more money I can throw at the principal – no? Though I supposed most who would qualify donāt think that way?”
I don’t know about the 40 year loan (more total interest over the life of the loan), but a lower interest rate, certainly. If you’ve already decided you’re going to keep your payments up, why wouldn’t the idea of lower payments for the same length of time be attractive? For those who qualify, it’s probably exactly what they’re thinking about.
Please say that these 125% LTV loans will be full recourse?!
Can we start sending out iou’s to pay our bills?
How about another round of stimulous checks?