On Tuesday, blog.HSH.com reader Diana wrote in with the following comment:
I have perfect credit, have never been late on a payment, have a low debt-to-income ratio, but I can’t qualify for HARP because I currently have mortgage insurance. WTF? Is this a way to get people to buy mortgage insurance? I am so confused by this. I also heard there is going to be a HARP 3.
Unless Congress changes the tax rules this year, mortgage insurance could become both more expensive and less desirable, something that would hurt the housing market nationwide.
Under current tax rules, the cost for mortgage insurance–whether it is through the FHA or through the private sector–is deductible to homeowners. For instance, if you pay $1,500 in mortgage insurance this year and are in the 25 percent tax bracket, your taxes would be reduced by $375. However, under the current rules, the mortgage insurance deduction will end this year.
We get that question a lot! While sometimes it’s hard to understand why a certain reader was denied a refinance based on just the information they left in a blog comment or an email, other times, the reason is rather black and white.
While I may be able to discern why a given homeowner doesn’t qualify for a refinance, the answers borrowers receive from their servicers are often vague and incomplete. But just knowing whether or not you have mortgage insurance alone could unlock the key to why you have been denied.
When you begin to ponder the idea of homeownership, you must first ask yourself, “How much home can I afford?”
A recent report says the number of Americans withdrawing early from their retirement savings to support their homes has grown substantially:
Fidelity [Investments] reported that 62,000 people made hardship withdrawals from their 401(k) workplace plans during the second quarter, compared to 45,000 during the prior quarter, a 37 percent increase.
We’ve been following developments in the mortgage insurance (MI) industry for a while now, documenting the reasons why the industry has practically disappeared from the marketplace, questioning why it wasn’t being assisted to a greater degree by the government, and declaring that mortgage credit conditions won’t improve without the resurrection of MI.
About four months ago we, along with National Mortgage News (NMN), thought that billionaire investor Wilbur Ross’s interest in United Guaranty Inc (UGI) was a sign that, among other things, the private market was once again gaining an interest in the mortgage market.
Be sure to check out our “Weekly Recap” to read up on any stories you might have missed this week:
Friday:
“Update1: Congress Approves Jumbo Conforming Limit, Still Unnecessary”
Why hasn’t Washington offered any aid to help the beleaguered mortgage insurance (MI) industry?
Lawmakers have thrown a bone to nearly every other sector of the housing and mortgage-related industries, but not to mortgage insurers. Especially at a time when credit requirements are so stringent and when most lenders are requiring a maximum downpayment, has not one lawmaker on Capitol Hill even considered propping up this industry that’s on the brink?
Note: MI policies help make low-downpayment mortgages possible since they help offset a lender’s cost of recovering the property if a borrower defaults. The inability to secure MI policies has crippled sales in some markets and for some types of properties since a buyer must come up with a 20% (or more) downpayment.
It hasn’t been easy for any class of borrowers to get approved for a home loan recently. Since the housing market collapsed at the end of 2006/beginning of 2007, lenders have incorporated strict underwriting standards in order to weed out less-qualified consumers. By today’s lending standards, borrowers must have stellar credit, job security and be willing and able to put down a lot of money upfront.
Years ago, when credit conditions were more relaxed, borrowers who couldn’t afford to make a 20% downpayment were simply required by the lender to purchase mortgage insurance (MI). MI is an insurance policy designed to protect the lender in case the borrower defaults.
Frustration is mounting among struggling homeowners who haven’t been able to take advantage of Washington’s refi or loan modification programs. Whether their lender isn’t returning their phone calls, is swamped with similar requests, or isn’t participating, homeowners are desperate for new solutions to help them achieve a more affordable mortgage.
Aleksandra Todorova of SmartMoney.com says there may be another source to turn to for help. Private mortgage insurance (PMI) companies may be able to help struggling homeowners get back on track with their mortgage payments: Read the rest of this entry »
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.
