Thanks to everyone who participated in the blog talk radio show last night with Bill McBride!

Based on the responses here and at CR, people enjoyed hearing from Bill, and are encouraging him to do more – hopefully we can do it again.

Here is the link to the two hours:

I will have the transcript of the show hopefully by tomorrow for those who prefer to read – we covered many topics!

Bill brought up the HARP refinancing of underwater mortgages, and how they are going to automated underwriting in March.  This means that the Fannie/Freddie loans over 80% LTV (though appraisals aren’t required) can be refinanced at today’s rates – with no qualifying.

The GovFed guys think this program will help another million people stay in their homes.  We speculated that if it was easy (or at least easier) to get a loan mod, more people would do it, and stay in their home. 

With 8-10 million foreclosures expected, if they could solve a million here, and a million there, and not have to foreclose…for now…could that be enough relief to calm the markets?

The new enhanced Home Affordable Refinance Program guidelines were released on November 15, 2011, and with this December 20th update they stated that no income ratios will be required for qualified borrowers (on page 7).  It appears that they will rely primarily on credit histories.

However, these are guidelines, and the lenders will come up with their own interpretation. 

Fannie Mae and Freddie Mac buy loans, they do not fund loans. Therefore, we must be reminded that these guidelines must now be met up with originators such as BofA, Wells Fargo, Chase, Citi, etc. who will then in turn create their own internal guidelines, based on their interpretation of what Fannie and Freddie have put out. In addition, the lenders may have their own comfort level, company philosophy or other internal reasons for making the program more attractive, or less.

Key components of the new HARP:

  1. The original mortgage must have been sold to Fannie or Freddie prior to April 1, 2009.
  2. It appears they are looking for scores at 620 and higher.
  3. The new guidelines are permitting one 30-day delinquency within the previous 12 months on the mortgage being refinanced provided the Delinquency was not within the previous six months.
  4. There are no LTV restrictions for fixed-rate mortgages with terms up to 30 years, including those with terms of 15 years.
  5. Any borrower with an LTV ratio below 80% is not eligible for HARP.
  6. The GSEs provided specifics on which liabilities would be lifted and noted that the rep and warranty adjustment is one of the most important components of the new program in order to create competition.  The lender will not be responsible for any of the representations and warranties associated with the original loan. As long as the new loan has no fraud associated with it, for the most part the new lender is off the hook as far as buy backs are concerned. This is a major point and will cause additional refinances.
  7. The lender is not required to make any representation or warranty as to value, marketability, or condition of the subject property unless they obtain a new appraisal. It should mean that the lender would rather NOT order an appraisal. They will likely order one in the event they believe that the subject property may have challenges that are not being fully disclosed.
  8. They are removing the requirement that the occupancy of the Mortgage being refinanced and the occupancy of the Relief Refinance Mortgage be the same
  9. The GSEs are also removing the requirement that the borrower (on the new loan) meet the standard waiting period following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed.

You may look up to see if Fannie Mae owns your mortgage by clicking here; and click here to see if your loan is owned by Freddie Mac;

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Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, which began in September, 2005. Stick around!

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