FHA Guidelines

presidential refinance plan for homes nov 2011

President Obama announced a new plan to help borrowers refinance their existing mortgages to new loans with lower interest rates and cheaper monthly payments. The plan is an expansion of the current program called HARP, The Home Affordable Refinance Program initiated in 2009 to let homeowners refinance their mortgages to lower rates.

The ratings agency cited insurance companies’ low loan-to-value ratios on recently financed deals and low commercial real estate loan delinquency rates on their balance sheets as the source of the continued strength. “Insurers’ cost of capital advantage, as well as reduced execution risk, should continue to favor a shift toward insurance-financed commercial real estate deals in a still-fragile market facing uncertainty over the 2012 economic outlook,” Fitch reported.Commercial and multifamily delinquency rates fell in the second quarter, while the delinquency rate for loans in commercial mortgage-backed securities rose to the highest level in 14 years.

President Barack Obama has announced two plans to offer relief for borrowers overwhelmed with debt. The first, an expansion of the Home Affordable Refinance Plan (HARP), will allow more homeowners with negative equity in their homes (in other words, are “underwater”) refinance their loans into lower fixed rate mortgages. The second, the “Pay As You Earn” program, will expand the relief offered under the Income Based Repayment Program (IBR) by allowing certain student loan borrowers to make smaller monthly payments, based on income, and to have the balances of their loans forgiven after ten or twenty years.

Last week, the Federal Housing Finance Agency announced its plan to tweak the Home Affordable Refinance Program to try and help more underwater borrowers refinance into lower-rate mortgages.President Obama even appeared on the Tonight Show to further spread the message of the administration’s plans. Analysts at Barclays Capital said the details of HARP 2.0 are essentially as expected although “the extent of rep and warranty relief remains somewhat unclear.”

Though mortgage delinquencies have been dropping, with 3.9% of mortgages 90 days or more behind, some two million homes are still in some stage of foreclosure, according to Lawrence Yun, chief economist of the National Association of Realtors. Even under the new HARP guidelines, borrowers will not be eligible to refinance unless they are current on their payments, have no late payments in the last six months, and have not made more than one late payment in the past year.

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