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January 20th, 2012

Our expert answers your blog questions

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Expert resized-HSH SpecialOver the last few days we’ve had an influx of good comments come into the blog. I enlisted Keith Gumbinger, vice president of HSH.com and 25-year observer of the mortgage and real estate markets, to answer some of the recent questions we received.

1. The first question comes from Rick who commented on the post “Update 1: HARP receives one year extension—what’s the point?

Rick’s question: “I have a Fannie Mae owned loan originated by EMC. Now it is serviced by Chase. Chase says [the loan] does not qualify for HARP because they did not originate it. How do I get around this road block?

Our answer: EMC was Bear Stearns’ (Wall Street bond house) mortgage company. Bear Stearns went out of business and was purchased by Chase who now has their mortgage portfolio. Chase, as the servicer, SHOULD be able to refinance the loan if it is HARP eligible. If they refuse, I believe that they must provide a “you’re not eligible for HARP” letter. I would think that, in the case where the lender isn’t in a position to refinance the loan under HARP (not participating, etc) that the homeowner can solicit another lender who IS in the program. You might also go the CFPB website and complain, as the CFPB is now collecting such things.

2. The second question comes from Mecca Keyes who commented on the post “Pt. 1: Help! I’m stuck in an unsellable home.”

Mecca’s question: “I had my house on the market since last February. I live in Newark and I know the housing market and unemployment is down the drain. My house is priced at $179,900. I owe $160,000. Can I ever get out of this house? Would you consider a short sale in my circumstance?”

Our answer: Factoring a 6 percent sales commission (you might negotiate for 5 percent or less), the lowest price you the seller could accept without paying out of pocket is about $169,000. Perhaps lowering the price might help. Have any offers come in, and at what level? What does your Realtor’s market analysis/appraisal put the value of the home at? The lender might consider a short sale, but only if all other reasonable means to sell have been exhausted, and the price has been chopped to the bare bone. Even then, the lender may want you to share in the pain to some degree in order to minimize their loss. You should be discussing these things with your Realtor and lender, as well as documenting any offers which have come.

3. The final comment comes from Angela who commented on the post “Update 1: Clark Howard simplifies ‘Making Home Affordable’ plan.”

Angela’s question: Wendy, We went through everything you went through but were eventually approved for a loan mod with Bank of America. It is such a stressful process and if my husband wasn’t laid off at the time I don’t know how we would have had time for it. It was his full-time job for about eight months. Our new payment is about $500 less a month but we are still struggling. I was reading these [HSH blog] posts in hopes of finding an answer to my question. Can we refinance after getting approved for a loan modification?

Our answer: The short answer is “no.” The reason the loan mod was made in the first place is because you could not qualify for a traditional refinance (or the lender would have generally gone that route first). Often, the loan mod will offer a lower interest rate and payments than what is available in the open market, making a refinance pointless. What is the present mortgage rate you are paying? Given expected fees and the likely state of your credit rating (which probably took a hit both before and as a result of the loan mod), what sort of interest rate are you after on a refinance offer?

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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