Speculation: Fed is key ingredient for refinancing underwater borrowers
First, two questions to consider
Question1: What has been one of the biggest stumbling blocks of the HARP program?
Are the wrong borrowers refinancing through HARP?
Not surprisingly, one of our more-popular posts on this blog is a piece titled “HARP receives one year extension — what’s the point?” Despite originally being published on March 02, 2010, the post still receives comments — the latest coming at the end of last week.
One reader originally wrote to us back in November asking why their family qualified for a HARP refi. “We are not the people in the situation HARP was designed to address,” wrote our reader in November. But in this turbulent market, our reader said it best, “This is an offer we cannot refuse.”
Weekly Recap (11/8/10-11/13/10
Saturday
Financial stress can be devastating. Studies have shown that financial stress is one of the main causes of divorce. But in today’s society, the past stresses we’ve seen caused by credit card debt seem to have been replaced with the stress brought on by foreclosures. The stress has grown so great for some that we’ve even read reports of borrower suicide.
But this week, a Baltimore woman dealt with her upcoming eviction in a way I haven’t yet seen or heard of: a hunger strike.
Washington to host mortgage and housing symposium
Unemployed? Underwater? Can’t refinance? If so, why not head to the D.C. area next week and voice your struggles and concerns to our people in power.
Beginning on Monday, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve are hosting a two-day symposium regarding the future of the mortgage and housing markets. From October 25-26, professionals from the public, private and academic sectors will meet to discuss everything from loan mods to mortgage securitization.
Federal Reserve Chief Ben Bernanke will kick off the free event (which is open to the public), and FDIC Chairman Sheila Bair will be a keynote speaker: Read the rest of this entry »
HSH’s “Value Gap Refinance” plan: Reactions still rolling in
Are you making monthly payments on an underwater mortgage? Have you been denied a refinance just because you’re underwater — even though you continue to make your monthly payments on time? If so, you’re going to want to read our Value Gap Refinance plan.
Our Value Gap Refinance plan has been featured in Fortune, the Washington Post, the Baltimore Sun, Yahoo Finance, Realtor.org and lots of local real estate websites.
Comparing underwater refinance plans: Ours vs. theirs
The Obama Administration released another program this week design to help American homeowners. The FHA ’short refinance’ program is designed to help current borrowers who can’t refinance because they’re underwater.
Under the FHA’s program, and in order to participate, lenders must voluntarily agree to reduce the borrower’s principal by at least 10%. Once the borrower’s loan-to-value (LTV) ratio is reduced to at least 97.75%, the mortgage will be refinanced into an FHA loan.
HSH’s underwater refinance plan
First Washington gave taxpayer dollars to banks, then Wall Street. Since then, Washington has pumped billions of dollars into Fannie Mae and Freddie Mac, automakers and delinquent homeowners of all sorts. Billions more have been spent on stimulus. Our government has helped those who have been at the edge of bankruptcy, insolvency and foreclosure.
But where is the help for a homeowner who has done all the right things? Washington hasn’t directed any financial assistance at the homeowner who is current on all their payments, who wants to remain in their home over the long term yet can’t refinance because the value of their home has fallen significantly. Low mortgage rates are great, but if you can’t access them, they’re useless.
Mortgage-market divide widens as 15-year refis increase
It seems that now more than ever, the mortgage and housing markets are made up of the haves and have nots. While the opportunities to recast and pay down debt are plentiful for one audience (the haves), the options for the other audience (the have nots) are few and far between.
According to new data released from CoreLogic, the number of borrowers who are refinancing to shorter-term mortgages is increasing: Read the rest of this entry »
Refinancing getting cheaper, but still not easier
Any time there’s a wave of refinance or purchase activity — which usually occurs when mortgage rates are low — we warn borrowers of the “Dangers in playing the mortgage rate waiting game.” Low rates don’t trigger automatic activity for everyone. While some borrowers jump at the opportunity to lock in at a low rate, others like to wait and see just how low rates will far before they make a move. Like any gamble, there’s risk in doing so.
For weeks now, we’ve seen mortgage rates fall to all-time low after all-time low. Some of my recent headlines have shown just how uneventful, and frankly unproductive, this era of historically-low mortgage rates has been: “What good are (even) lower mortgage rates,” “Low mortgage rates, slow growth: same old story,” “It takes more than just low mortgage rates.”
What Good Are (Even) Lower Mortgage Rates?
After the conclusion of the Federal Open Market Committee’s (FOMC) one-day meeting on Tuesday, the Fed announced measures that will help serve to keep mortgage rates low if need be:
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.1 The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.
