Weekly Recap
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”
There’s A Reason Refis Aren’t Getting Any Attention
You don’t hear much about the Federal refinancing effort these days. In what started out as the focal point of the Treasury’s two-pronged attack on the housing crisis, soon became dwarfed by the rescue’s other facet: modification.
So why haven’t we heard much about the Making Home Affordable refinancing program lately? Perhaps it’s because the program isn’t doing well, or perhaps because the audience that it was designed for is opting for other solutions besides refinancing.
Dangers in Playing the Mortgage Rate Waiting Game
Back in June when mortgage rates began to increase from their spring-time lows, we wrote a post with the exact same title as this. Despite the fact that we’re republishing it some four months later, the context still applies (emphasis added):
When mortgage rates sank to the lower end of 5% [in May], hordes of borrowers began the refinance process, eager to cash in on a lower rate. Even when the rate was close to 5%, some borrowers waited for rates to drop even lower. Now that the recent spike in mortgage rates has ended the refi dream for many, some borrowers are blaming themselves that they didn’t lock in fast enough.
Update1 When All Else Fails, Try Shaming Servicers into Cooperating
It’s no secret that the Obama Administration feels that mortgage lenders and servicers aren’t doing enough to help those facing foreclosure.
After enduring months of criticism on their lack of production, 25 mortgage-servicing companies came to Washington to tell their side of the story and offer some suggestions on how to make the process better. Whatever explanations or suggestions were offered, they obviously weren’t good enough (emphasis added):
The Obama administration wants to shame the mortgage industry into doing a better job of helping borrowers avoid losing their homes to foreclosure.
Has “Refi Fever” Left You Hot or Cold?
Cashing in on historically-low mortgage rates and government-structured programs, thousands of homeowners are flooding lenders’ offices across the country looking to lower their monthly mortgage payments. “Refi fever” has gotten so high that it has overwhelmed lenders, disrupting the program’s forward progress. Even long hours and thousands of new employees hasn’t been enough for lenders to allow programs like Making Home Affordable to reach their full potential:
However, even with extra workers, brokers are struggling. “It’s amazing how much paperwork is involved for each application,” said Sandy Wagner, a mortgage broker with Preferred Empire. “It’s hard for the brokers to keep up.”
Subprime Borrowers Will Return to the Marketplace (Part 1)
Subprime borrowers will eventually return to the marketplace as a demographic of great interest to lenders. Looking back on the trends of years past, it’s nearly impossible to predict when, but it’s certainly plausible to predict why such a statement may be true.
Looking back to the causes and effects of the surge in subprime borrowers when the refi boom dried up in 2004, it certainly stands to reason that due to current economic conditions and credit restrictions, a newly developed and under-served audience of “below prime” borrowers will emerge — and lenders will take notice.
Short Sale Pilot Program Not the Answer
Fannie Mae has begun a pilot program in two of the worst housing markets in the U.S. to determine if short sales can exist as a viable alternative to foreclosures. A short sale enables a homeowner to avoid a foreclosure by selling their home for less than the value of their existing loan. Yet, getting mortgage investors to agree upon who takes a loss has been the main hurdle preventing the measure from becoming a viable, broad-based solution.
In general, there are three knowable outcomes for a home loan that investors can prepare for. History says the loan will be either repaid in full, refinanced or paid off early (refi sale), or fail (foreclosures). Lenders, brokers, and guarantors are now being socked — and are unprepared — for mass volumes of alternative outcomes — loan modifications, short sales, and now potentially “cramdowns.”
Why Not Add a Mortgage to Your Black Friday Shopping List
With this week’s big rate drop — the conforming 30-year FRM dropped to 5.77% yesterday from 6.06% on Monday, the largest single-day drop since September 8 — now is a great time to run the numbers and see whether refinancing is for you. Be sure to use our Refinance Calculator, because it’s important to know the real costs — and potential savings — before making a move.
With this easy-to-use, interactive refinancing worksheet, consumers can see how their existing mortgage payments might change if they were to refinance, and, just as important, how long it would take to recover any closing costs associated with refinancing.
