A Government Program That Might Actually Work?
Click the post title above to watch today’s video! Catch all your real estate news and mortgage news with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com!
FHFA HARP News Release: (Note: It’s a pdf file, so it will download to your computer!)
http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf
fanniemae.com/loanlookup or 1-800-7fannie and freddiemac.com/corporate or 1-800-freddie
I think this new initiative is a non starter. why? what about those homeowners underwater that don’t have a government GSE loan ? they are making their payments, good borrowers in every way and want a break.
the Fannies and Freddies have already had their chance for nearly two years and we know that only a fraction of them took advantage of this.
To check and see if it is a Fanniemae loan:
AWESOME SHOW! I think new guides on this will be great. Its a small step in the direction of FINALLY “rewarding for good behavior”…makes sense!
Comments to some of you:
AVMs will be used for pricing hits (even though some of the other ones will be reduced/removed…I’m sure we’ll still see some hits…and the’ll want to have some reference point for how underwater they are.
I agree that opening this up to all loans would surely allow for an amazing surge in the market & don’t see why it should only be Fannie & Freddie owned..but hey, I don’t make the rules.
In today’s world the 125% LTV is only something in writing that is not adhered to by the end lender’s overlay. How will increasing the LTV change the minds of the banks unless they are forced to refinance where they don’t really want to. Today 105% is really the highest not 125%.
Well, I definitely think lower Mortgage Insurance could help. Although I have to wonder who it’s really helping.
I started this Facebook page over a year ago called Current Homeowner’s Interest Reduction Program (CHIRP) and it looks like it’s finally happening!! Glad to hear you guys think it can help too. I’m just bummed they didn’t name it CHIRP. Maybe there’s still time!!
Great idea to maintain a home, get lower rates, etc. Wish that there was a principal reduction element available. But we can’t have everything at one time.
Brian, adorable daughter… Definitely Mom’s fault.
Great idea to maintain a home, get lower rates, etc. Wish that there was a principal reduction element available. But we can’t have everything at one time.
Adorable daughter… Definitely Mom’s fault.
Smoke and mirriors again. While on the surface it might seem wonderful and hopefull. It is still a bandade that has the potential to tear skin when it comes off. IF we are looking short term horray, if were looking long term where are all the jobs to pay for the rebuilding of the chain. Keep your eye on the Jobs if you really want to see a comeback. Everything else is just special interest for the banks or government at our expense.
I have been saying this exact thing for over a year. The good thing about this program is it doesn’t cost the government a penny and it does create money into the economy.
I’ve been calling for this forever. http://www.youtube.com/watch?v=CJR0X184VHg&feature=player_embedded
Marc Savitt and I from NAIHP met with the White House and made sure that the brokers were involved.
We’d like to see appraisal in too because then the lender can know that the house is owner occupied and that the place is not falling down!
Brian,
You must have a beautiful wife and I’ll bet you get a lot of mail similar to this.
Well said Jim. Bank overlays will crush a good percentage of those eligible, just like the 5.31.09 date is now. Like many of you, I probably have 10 clients frozen by the ridiculous date stip. How about a sliding date, 12-18 months from current date? Once again, need our voice heard. NAMB silent, where are they?
With the AI and NAR blowing everyones money on coke and whores since the end is near. Its my only guess, since you would think these groups would be going all jihad with everything there ramming down the throats of these groups and the consumers, again, just saying
Just a few points:
1) To all of those advocating principal writedowns – understand that Frank and Brian have absolutely made a valid point in regards to the attractiveness of MBS investments if such a program was proposed. Some of you have pointed out that an undercollateralized loan lessens the value of the pool anyway, however in the case of an MBS, it’s loan performance that matters, not home value. As long as the loan balance remains the same (and the loan performs), the fact that the home is upside-down is meaningless. It’s only a paper loss, not an actual one. Think of it as a 401(k) – if the market tanks and you’re not taking distributions, it doesn’t mean anything in terms of real dollars. If the market tanks, and you have to start taking draws, you now have an ACTUAL loss because that portion of the money can’t grow to its pre-crash levels. Principal writedowns on loans in an MBS pool are ACTUAL losses, equity deterioration is not.
2) As with any program, the devil is in the details. I’m cautiously optimistic on this one, but until we see actual news as to what reps and warrants are being eliminated or modified, we really don’t know how the investors will respond. Like many other commenters, I also believe that the delivery-date timeline doesn’t make sense if the stated goal is to help as many performing loans as possible because it eliminates all of the 800K people who have refinanced under the program once.
3) Some of you have indicated that this program doesn’t help those in distress. This is true, however that is not the intent of the program. The distressed homeowner program is HAMP (modification) not HARP (refinance), and the fact is that not everyone qualifies for a modification. We need to face the fact that there are a substantial amount of people who will simply not be able to continue as homeowners, and stop throwing out program after program designed to prolong the inevitable. Everyone in the industry pays lip-service to a desire to see an improvement in housing but we WON’T see that happen until we have a handle on actual inventory and thus can find a bottom in prices. Either we subscribe to free-market principles or we don’t. The market will correct itself if we allow it to do so, but for the past 3 years we’ve done everything in our power to stall a recovery out of the belief that somehow we need to stop everyone from losing their homes. Countless dollars later, where are we? Still in a housing depression. If you want to help these people, allocate funds to help them get back on their feet as renters. If they succeed as renters (and we allow the market to create jobs too!), they will eventually become successful homeowners again if they really want to. If not, well, que sera, sera. I’m not trying to be heartless here, but let’s be honest with ourselves – a market recovery will NOT happen until we know where the bottom is.
Hey: Frank Absolutely no appraisal offense taken here!
This is the only chance I’ve seen come down the pike that allows me to refi my $600K loan at a lower rate.
What does bother me is it took an act of congress to make banks see the obvious point that if they simply lowered the rate more loans would have stayed in tact, instead of letting the owner go under. I guess they just don’t have their customers best interest in mind, now do they?
I know the reason why they weren’t doing it. It was because the fed was propping them up per the F&B show about a year ago, showing us the numbers the banks were realizing on a foreclosure bailout.
Also alot of loans were written at what I consider to be pretty rediculous rates of 8-9%. These people didn’t have a chance, and the banks were not about to cut the loan rates to 4% when they had the owners by the short hairs at 8%.
Well apparently reality has come home to roost, but I don’t know who exactly to give credit to for this bill. Was it the Republicans or the Democrats? Seems like both will try to take credit, however, the real question is why this common sense solution wasn’t done years ago?
Look at all the people that would still be in their homes and still be paying loans. Maybe a little less but still making payments. INstead we have blood running down the streets.
I call that REAL sound management of the country’s finances!
2ea, 4 year terms for Senators, and 4ea, 2 year terms for Representatives, is one easy fix for this. As it would remove the “Political Motivation factor” to some large degree.
Any one who has seen the email circulating about the 8 point plan to reform congress really needs to get on board, support it, and talk it up.
These people are directly responsible for every single problem this country has and yet they all seem to be doing very well despite the havoc they create with nearly every piece of legislation they concoct.
Reigning them in a little would be a good thing!
Anybody disagree?
Randy
Doesn’t matter what BO/FNMA/FRMac want to do….the bank overlays willl crush this idea…duh!!…get rid of the 5/31/09 date and make ALL conforming loans eligible…principal reduction to a qualified buyer that wants to stay in the house makes more sense than foreclosing but then the banks probably get reimbursed through insurance policies for 100% of their loss on a foreclosure but not on a principal writedown. So once again, screw the customer so arrogant pricks like Jamie Dimon can fuel up the LearJet and fly his family and friends to BoraBora on the Chase credit card.
This is a great start at keeping homeowners in those homes. No one wants to rent for more than the payments and be forced out of a home they love.
Thank you Frank and Brian for such positive feedback.
As a wholesale rep for Freedom Mortgage, We will offer this program. We are gearing up and pricing will be extrmemely competitive.
This is a chance for all the Brokers as LOs’ to help the borrowers save their homes and credit ratings! B of A out of Wholesale and Corresp lending and they hold the majority of these potential loans. This is a chance to help borrowers and make a half way decent living (for a change).
I personally know 3 people that this program will literally save them from going under.
PS: Is frank single?
THEN WHY EVEN USE AN AVM IF VALUE IS NOT AN ISSUE?
Your right! Lets all start guessing what the values of your homes should be. Me, I think mine is about a million dollars
No chance, Tom, AVM says 1.4 mil. My AVM is a black ball with a window on the bottom. I shake it really hard and it gives a number instead of a word answer. C’mon, (shake,shake) 2 million, Damn only 1.6 mil this time, too bad, maybe next AVM. just threw up in my mouth a little bit because its so close to reality.
That’s pretty much how they are gonna do it. With property values already down I don’t know how many times they are gonna shake that black ball and still find the value wont be there. How’s that puke in your mouth? any corn in there from the night before?
Fannie/Freddie only have two avenues of recourse lower interest or lower principal to avoid default. It seems obvious they will choose one to try first before having to take a hit in both areas. They are going to protect the principal first (although under water is still underwater for accounting purposes) and take a relatively smaller hit on interest revenue. This plan could salvage some loans and decrease the future foreclosurer actions. It is a place to start to protect the gov’ts ability to rent these properties to folks who are under the illusion they own the property.
LTV ratios (100+++)way over what the real values are? Isnt that what got them into trouble before? The homes are not even worth it and most AVM’s I look at are even lower in values on the homes than the appraiser would come in at. Keep up the good work Zillow!!! Your accuracy is horrible!!!!!!!!!!
WHAT A BUNCH OF CRAP. THE ONLY THING THAT WILL WORK IS PRINCIPLE WRITE DOWNS. EVERYTHING ELSE LIKE PUTTING A BANDAID ON A SLIT THROAT. THE BANKSTERS SHOULD TAKE THE LOSSES, NOT HOMEOWNERS….WE DID NOT ORIGINATE THESE TOXIC LOANS AND SECURITIES. HELLO WALL STREET AND THE BANKS!
So many good comments before me.
One question i have is the date loan purchased by. Why set a date at all? Or better yet…why disallow someone to do this program only once? I did several of these when it first came out in ’09, but rates were around 5.25% or so. But now? Some people stand to gain by doing it again, but are locked out. Some of them qualify for the traditional FNMA/FHLMC program, but would have all benefits stripped away because now they would be over 80% and forced to have MI….no dice for these people that were among the first to sign on to this program.
Appraisers….don’t get upset with this no appraisal required thing. As somoene mentioned before, these are deals that wouldn’t have been done before the change so although you see it as lost opportunity, another post commented that if an appraisal were done these deals would still not be done. My brother is an appraiser and we talk about this stuff all the time. Me a broker, he an appraiser….man o man what great debates we have with unconditional love required! But seriously, if this program can make some more loans go thru helping people pocket more savings, then why not? Wouldn’t that be a long term help to the RE industry in general in hopes that life can move on someday soon….i hope??? We desperately need the appraiser community to survive and i for one am a huge supporter of the independent appraiser.
Other lenders/brokers have made excellent comments about problems with this thing such as if there is currently MI…then the servicer is the only one to do this. I’ve had these borrowers call me begging that i find a way to do it because their servicer is not a place they prefer to do business. We have also had interesting conversations with borrowers that have received offers for this program thru their servicer to find out that they were just about to be completely taken advantage of with a rate that is at least .5% higher than we could offer…all things being equal of course(fees, etc). This is always troubling because you have wonder why this is? To me the answer is obvious….the servicer knows they’ve got ‘em where they want ‘em and will take advantage. That’s still the problem when you create a program that is not facilitated with free market competition. Big banks still have way too much power/control which makes anything the FHFA or any other “authority” making a plan for lending anything to get too excited about.
Then why evem bother with the AVM?, They still want to know the value, What if the govt has their people doing the refies so there are no fees to the owner whatsoever, still a great idea, Appraiser are mad because they are using an AVM, We would prefer no AVM than someting that provides a low quality value, THAT IS OUR ISSUE
Good point. I don’t disagree with your frustration with AVMs. These more or less come from FNMA/FHLMC AVM model and I can say that i’ve been surprised on both sides of the automated findings. I’ve been shocked by the allowance of a value I thought was too high and completely frustrated when the value seemed unfairly low resulting in “loan level pricing adjustments”….aka, a tax on the homeowners that just happen to live in a community where values dropped more than others.
As you said, why even do an AVM and just allow the HARP Refi loans thru regardless of valuation, right? If their true intent is to help the homeowners, then do it. If some other posters here are right about this being nothing more than a big banking bailout in disguise, then shame on them once again. I just cannot live believing everything is “them” against “us” as a conspiracy theory.
I agree that the people should be able to pocket more but why should they do that at the expense of the appraisal or appraiser? If we as appraisers let this type of thing happen there wont BE an appraisal community left. We sadly didnt adequately defend our positions, we were thrown under several buses by the professional appraisal organizations to boot, and permitted the HVCC thing to pretty much slide and look what happened. Everyone and the housecat was stating at that time…”it shouldnt be an issue if you are doing nothing illegal”……now as an appraiser you cant decent fees, ALL costs to operate have increased, you are hounded constantly for the report, the reviewer isnt even an appraiser and the reports I send in are 40 pages long!!!!!!!and they are going to get larger by all accounts because more information is being required/demanded. You as a broker can govern where you send your clients for the best deal……WE as appraisers do not have that luxury as the work, if and when it does come, is usually at a low fee, has strict timelines, penalties if you dont submit on time, harassment from the amc’s and then to top it off we are being told by others to relax as its not going to be a problem….ET TU Brute….
Joe, there are about 107,000 total appraisers licences (total of cert,lic,gen,etc) in the entire U.S.A. (per the ASC, goto to https://www.asc.gov/National-Registry/ActiveAppraisers.aspx), I am certified in 2 states, so are 3 others I know, I know a bunch that keep their lic, but are inactive, retired, etc. So, what is the real number of working appraisers, maybe 80,000-90,000 at best-now divide by 50, whats the avg per state, We would never be big enough to protect or defend ourselves no matter how much each of us contribute or fight, we are too small. The fact is that govt rules required an appraisal before, now the AVM is allowed. If these people do not understand, including F&B, we are left to die out, No worries, I believe the govt is actually trying to get rid of these guys, we are just the casualties of that. They just do not get it becaue the truth is- many of them, not all, hate us and want us gone. If you have learned anyting since all this started, Be careful what you wish for!, you are next.
Joe – i have no disillusions as who may or may not be trying to get rid of me. I hear plenty about appraisers’ fear of being cast out of the picture alltogether. Sadly, it really is us(brokers, agents, independent appraisers) against them. NAR does it’s thing, but only has agents in mind. At the end of the day we are after the same thing….a nice career and happy customers. My dream is for someone smarter than me to create an organization where all independent Real Estate Professionals are banded together. Sometimes we argue, but in the end we are after the same ultimate goal.
The banks are getting their cut in this program, in that all the crap loans that they have they can unload on the GSE’s and have absolutely no liability in them. None. This is just another bank bailout. Obama does nothing that doesn’t help the banks. This is an off-shoot of the administration trying to get the banksters crimes expunged and leaving the taxpayers on the hook. As screwed up as banks are, this will fail too – but the banks will profit at taxpayers expense.
In defense of the need for an appraisal in ALL transactions:
In addition to value, an appraisal reports on occupancy (non-owner? multiple tenants?), condition (is it marketable or even habitable as is?), permited versus non-permitted improvements (walls without footings? garage conversions?), incomplete construction (a 125% LTV mortgage in 2nd position to a mechanic’s lien?), and site hazards (empty pool? pool fencing? dangerous wiring? un-repaired damage (water damage, obvious rot or termite infestation?)
This is still a secured loan and the property as security needs to be classified in order to attempt a valuation of the note.
I’m sure there’s more but rates just dropped again… Gotta get to work!
The agency (FNMA or FHMC) is ALREADY holding this paper regardless of property status, i.e. all those things you list as a justification for appraisal on all deals. There is NO NEED for an appraisal as they’re already at risk regardless of status. If the home has un-repaired damage it already has that. Discovering it on appraisal to drop the person’s payment doesn’t change that fact. I was once managing a residential unit for what we discovered was a horder. The interior of the property was a mess. The person made timely payments and had been in the unit for years. Discovering the hording was a non-issue. If we forced him to fix it, he probably would have left: similar thing here. What good is done by “classifying” the security as you put it? It’s already a security held by the agency in question. I don’t see why people trying to save money should needlessly incur the expense of full appraisals. As stated in the video, LTV is inconsequential, the entire point of the program!
Is the new HARP program only for owner-occupied homes?
How are the banks going to make money if there are no appraisals for them to steal from, this will cost banks millions in money they cant steal or skim from appraisers, just saying. I dont think it will work if the banks cant get their cut. So, as an appraiser I need the bank to be interested in stealing from my income so I have a big enough bully protecting the money he plans to steal in the future, Wow thank god for banks.
the one thing the guys didnt mention is this only applies to mortgages owned by FNM & FRM
Missed the mark again guys.
This is a way for the banks to off load more underwater garbage onto the taxpayer therefore changing the definition of what is a conforming loan.
Where it gets even better is this time there is no put back clause. We get stuck over and over again.
Lets be honest here the only thing that will work is, and will always be principle reduction. But the banks will have to take the hit and that is why it will never be done and this is just another backdoor bailout.
I still don’t expect the new lender will be eager to write loans that will have LTVs much greater than the current value. Overlays were generally at 105% unless the original lender was still servicing the loan. Reps and warrants reduction opens the door wider, but many of the loans I see has transferred the servicing to companies that specialize in disposal of assets…..and they don’t originate. Am I wrong or missing a key element that will encourage banks to take on these high ltv loans? Would love it to work…have plenty of people that are stuck.
NO APPRAISAL REQUIRED. It always seems like taking the Appraisal out of the loan process is a cost savings to the consumer. Just how much savings would there be taking the COMMISSION PAID loan broker, loan agent out of the process. Appraisal on a $400,000 loan, typically now that Appraisers are Pimped Out .00075% of loan. Broker – Agent fee? what is it not 3% of the loan – let us give the consumer a real deal and have them just go to the bank, fill out their own paper work and submit it to a computer! hey what a savings!
Geezus, you want some cheese to go with that whine?
i cannont think of one time that cutting out bank’s competition has resulted in a “deal” for the consumer. Cutting out their competition always results in increased profit opportunity for the banks. Competition is the only thing that keeps the consumer from being completely screwed.
Although it does make it easier and less expensive, i am not sure what the thinking is on cutting out the appraisal. I seriously doubt that the PRIMARY intent was to benefit the consumer.. . That would be a first! maybe they dont want evidence in the file so they can manipulate the numbers to benefit themselves as needed down the road? Maybe they dont want the consumer to realize how screwed he is during the refi process?
The borrower still must go to the servicer when they have PMI. The independent broker will not be able to refi somebody who has PMI. By having to go to the servicer the borrower gets a horrible deal with regards to closing cost and rate. The servicer knows the borrower cannot go anywhere else because they have PMI. Hopefully this new plan allows the broker to refi a borrower with PMI.
Thanks
Seriously, someone going from 6.5% to 5% is getting the raw end of the deal how?
IMO this program will not be “boom worthy” but it will add a few more loans to an Originators production…If I can personally manage 2-3 closed/mo. I’ll be okay with it…I am just not convinced that 2-3/mo(24-36yr) is realistic.
Additionally, should one expect rates to remain low (artificially or otherwise) if rates do move up this program is useless…Who is going to refinance their upside down home into an equal or higher rate?
An associate in my office is convinced that people will take a lower/rate shorter term scenario to cut years off of the balance…I am skeptical.
Clearly, this program is just to lower the interest rate on performing loans, regardless of LTV requirements for Freddie & Fannie. My question is: Will credit score requirements also be waived as well; so long as the borrower has kept their mortgage current? Many borrowers have kept their mortgage payment up to date, while letting unsecured credit go delinquent or filed bankruptcy. Can anyone answer this? Thanks.
In Florida, there are an abundance of homeowners that are significantly upside down (100k or more). BofA has a ‘pilot program’ going on in Florida where they are paying people $500-$20,000 to short-sell their homes to help with defaulted mortgage and homeowners in distress. The changes to HARP help those who have been continuing to pay on their mortgage, and on time and still have good credit. However, in the end, they will still be upside down still anywhere from 50-200k potentially depending on the scenario. Where, someone who decides to do a ‘strategic default’ can actually be compensated up to $20,000 to sell their home and potentially be free of any future liability for the deficiency(http://www.dsnews.com/articles/bank-of-america-launches-test-and-learn-short-sale-program-in-florida-2011-10-11). Even though the borrower who maintains a timely mortgage saves on the monthly payment, they are still upside down considerably. I ask you which strategy seems better?
Okay, I do not want to rain on this parade. However, only the lender of record will be doing this business. Only hope they do not load up the overlays that would translate to higher than average by .50pt to the rate plus. I do feel this will add some fuel back to the economy.
I only did one of these in the past, but the lender of record did NOT do the loan. That lender of record is now at most the servicer.
What???
Since the loan had been sold to Fannie, the original lender is, at most, merely the servicer of the loan. ..and that lender had no say in the matter of the refinance
I don’t understand your rationale that a principal reduction would damage the mortgage securitization process. The fact is that an existing mortgage on an underwater home is worth less than face value in the current market. A principal reduction would force the lenders to recognize reality. There are many credit worthy homeowners currently on the fence about strategically defaulting; refinancing without a principal reduction does not eliminate the emotional reality the homeowner feels that s/he is throwing money in the trash by paying interest and principal paydown every month on a loan that exceeds the home’s value.
Also, in those states (such as Arizona) with purchase money anti-deficiency statutes, the homeowner whose loan was obtained to buy the home, may be giving up that protection if s/he refinances that loan.
If you have read this far, you will be interested in learning about this no cost program for the underwater homeowner who wants to stay in his/her home and wants help NOW to get out from the overvalued mortgage. http://windsong.whybellahomes.com
It’s a step in the right direction – FINALLY! However, when originating these loans, we have to abide by the overlays the mortgage companies impose. So even if Fannie and Freddie have no LTV limits, the mortgage companies originating the loans do. Until they are forced to remove the overlays, we’re still not able to help the 5 million homeowners that can benefit from this program.
Spend your own money Obama and stop spending the taxpayers. The taxpayers are on the hook for all these loans that are sold to Fannie/Freddie since we own them. This is pomp and circumstance for the Obama campaign.
You know. you’re right. What were we thinking? Anything that might possibly be a positive for Obama, possibly leading to his reelection, is to be avoided. The goal, after all, is to make sure he is a one-term president, regardless of any immediate help to the nation.
Seriously. Do you really think this is going to have a huge cost to the taxpayer? I mean, compared to the current costs that are likely to continue without some significant action? Will some people bail even after a refinance? Sure–but if they have been making their payment since 2009 even though underwater, there is a high likelihood they’ll continue at a lower rate–and dropping that house payment by $200 or more, that is money going back into the economy, along with keeping that beleaguered homeowner in his home. Oh, wait. We should just further reduce the tax rate to get him his $200, and let him suffer with his situation. Personal responsibility, and all that. Right. Got it.
on the refi…. I’ve been suggesting a version of this for years. Like the streamline FHA refi it should be a good thing. It strengthens the loan. It is much better on the investors since they get a payoff and not a defaulted loan to deal with. I’d even go so far as to say that there should be a pool that specifically addresses that situation up front…. an MBS that knows that people will want to refi and will allow a streamline refi (maybe with at least 35 months in between) for a reasonable refi fee to the investor, no income, no asset, and appraisal just to confirm property condition. That would still reduce the chance of borrower default and help the economy in general so that there is less likely to be difficult peaks and valleys like the past several years.
My only question is that if there is someone on the edge who is about to default and could qualify for a modification, the refi may take them out of eligibility for a mod. Of course the chances of a mod with principal reduction are slim anyway so that concern is not relevant for most borrowers.
to Joe Colorado, appraiser : Hey Joe, I really don’t think you should take offense to that. It actually supports the professionalism of the appraiser. The AVM is used only when there is a good borrower, stable property in a non-declining market and the LTV is less risky. You have to admit that if htere is a loan at 50 or 60% ltv, the appraised value is less important. They can usually use even the assessed value and come up with a decision. Even at 75% when there is a purchase price the value is approximated by that price. The appraisal is not an exact value either and it can be off by 10% easily. With some of these appraisals coming in at prices way under what the legitimate buyers are willing to pay, you have to wonder. We know it is pressure from the management companies and lenders who require them to ignore some of the appraisal rules.
If the appraiser had to be used for every loan, it could be seen as just another piece of red tape that any rookie could do. When they refuse an AVM and choose to use a professional you ought to feel good about that. Personally, I don’t see the files without appraisals very often. I will admit that I like that file simply because I know it already has an edge, the cost to the borrower is lowered and it makes my job easier. Face it, the more deals that get done, the better off you will be for future business. The best answer is that competition is good. AVMs offer a little competition to the appraisal management companies. They’ll keep them in line a bit and that can only be good. We still love appraisers.
Hi, can somebody please tell me if the HARP program can assist borrowers that currently have MI on their mortgage loans? I have assisted borrowers that had initially purchased or refinanced, but they had at least 20% down payment. My belief was for anyone carrying MI, you either had to deal directly with your servicer, or you could not get the deal done. This leaves the broker out of those type deals. Any update on that side of things?
Thanks
As an appraiser in a rut (a grave without ends) this program will throw dirt on my face and further end my already dying ability to make a living.
Jerry, those loans that will be done without an appraisal would not be done at all if the borrower had to get an appraisal. You’re not losing anything–and I think the long-term benefit to the industry (as well as the economy in general) will be significant.
This is a baby step. It still isn’t going to help with 2nd mortgage lien subordinations. I’m sitting on 38 loans since the Stimulus Act was announced, that I can’t get done because of second mortgage subordinations and they’re not even at 100% LTV!!! It would have been nice to at least force subordinations up to 100%. The MI is a problem too. Those are my two biggest hurdles, along with the date restrictions. I just had to let 4 loans go because they weren’t sold to Freddie until June or July of 2009. Borrowers were making their payments as of April 2009, and they STILL can’t take advantage of this program because of how long it took to securitize the transaction with Freddie Mac, which seems unfair to the borrower. I’ve already had calls from people waiting for some relief, and I’ve still had to be the grim reaper and tell them, “no, this reform still doesn’t help you – sorry.” I was hoping for a cure and I feel like all we got was another bandaid.
I watched the President’s address and I thought Wow! this is a great program! I need to call my mortgage broker/banker and see if he can do it! Then I thought, wait I’m a mortgage broker and I have my own business! Sure enough the calls started coming in: How does the new program work?
I chimed in on this LO’s post because we need clarification. If the President would outline: Min FICO, # of mortgage lates, if the borrower can get current-will the program work for them, are condos allowed?, are servicers required to do this by law, what the hits are, and so on… even Joe the Plumber would get it. Where’s the homeowner who doesn’t know how mortgages work? You need to get this info to Diana Olick so she can put it on TV.
~~TMS~~
Just a Question:
Do you really think with all the fees waived, appraisals, interest loss reduction etc. the servicing companies are going to allow other than the servicing lender to provide these loans?
I didn’t know loan servicers have that much clout. Since when can they overrule a refinance?
The biggest issue I have with the program is that the servicers still have a major advantage since they do Refi Plus while we only have DU Refi Plus and LP Open Acess. No income verification or credit report for them. That takes care of two out of the three issues in qualifying these days. No LTV limits and AVM’s will help some for us, but this isn’t a windfall for the industry.
I too am confused?? I thought it was to be re-financed at the value it is worth today. Why would anyone re- finance to Only get a lower rate?? But still be in negative equity??? A modification to the interest rate is all that is needed. Not a re fi. Am I not understanding something here?
I guess for some people, they don’t want to walk away…they want to do the right thing and stay, but at least get a rate drop.
For others, the real “strategic” default decision makers, they do the following calculation. IF my net after tax payment less pride of ownership factor is LESS than the cost of renting an equivalent home, they will STAY regardless of the equity issue. IF that net payment is GREATER than rent, they will leave unless they have sufficient equity
The big benefit to the BANKS, LOAN SERVICERS AND OTHER LENDERS is the old loan with all the robo signing, fraud etc problems can be converted to non recourse loans with reduced reps and warrants. This is why they can’t just reduce the rate and must refi. AND YOU THOUGHT THIS WAS FOR THE GOOD OF YOUR CLIENTS???
The fact of the matter is that to date there hasn’t been a true consumer
benefit program initiated.
By re writing these loans it only takes the onus off the originating lender’s back.
They have a hard enough time trying to produce original documentation.
Can’t begin to tell you the number of BofA borrower’s I’m talking too (actually Countrywide loans) that are not Fannie or Freddie that I cannot help. Perfect HARP clients, but no Fannie/Freddie, no deal. Very frustrating.
You are sooo right, Ray. The millions of non conforming loans, 80/20s and their cousins are the next foreclosure shoe to drop. A lot of those loans have already been written down on the books of the lenders who hold them. Programs should be made available via Freddie, Fannie and FHA that give these folks an escape – at least from the variable rate first mortgages that they have. Do it now before we see millions of new foreclosures as rates rise.
I personally have a non fannie/freddie/fha loan. My portfolio ARM so far has provided a lower interest rate with each change. I’m now @ 3%, BUT it won’t last forever. Since my income sucks now I have no way to qualify for a refi of my ARM. My plan is to pay down the principal all I can and sell when rates start changing. Hopefully I’ll walk out at least with a few bucks in my pocke.
I remember there is a website to find out if the loan is owned by Fannie or Freddy. Does anyone have that site or what is the best way to find out?
Let’s see: Paying people (those current on their loans) get a lower rate, lower payment and the lenders buy back is eliminated. The loan may or may not be underwater now, but the way things are going, what is the likely hood that it will be underwater a year from now; with dropping home values and the very great possibility of inflation in the near future?
If I am a lender, it would seem to me that I would want to offer all my “best” mortgagor (the ones who are paying on time and have the best loan to value positions) a real deal. No appraisal, no or low cost of refi, no income verification and a lower interest rate and payment on a fixed rate loan. Refi? not really, we will just make you a new loan! That way, anything we did wrong on the current loan can be corrected, just in-case we have to file on you in the future; you know, so that whole secutitization thing will not have to be dealt with. Oh, and by the way, if there is any question as to whether or not we actually own the note and have the right to refi your loan; well, that all goes away with the new loan, so, don’t worry about those technical “legal” things. Just sign here and get your new rate and lower payment!! Lucky you!!
Having that rolling advert front and center AND to the upper right page REALLY REALLY pisses me off as an appraiser. It cuts to the quick that you appear to condone obviating the appraisal in the mortgage loan process and then permit the flaunting of it to the readers and participants of this blog.. I thought you guys supported appraisers? I am obviously incorrect. I understand and appreciate that you have to make a living by accepting adverts, but isnt there something(anything) else that could be placed in lieu? perhaps something that doesn’t directly target by insulting and demeaning part of your reader base.
Coming from the LO’s point of view, since I’m an LO, I didn’t get the same opinion as you at all. Eliminating the appraisal on this product is the ONLY way it will work. I am currently contacting the $2,8 million in loans I have lost over the past 90 days due to a value coming in lower than I needed! It’s nothing against appraisers, the values were accurate just too low.
Joe: Boy do I agree with you on that! UWM has always paid well below customary and reasonable and now they advertise doing away with appraisers altogether!
Had webinar with FHFA/Fannie/Freddie yesterday and DU/LP will not be ready to run these loans until the first quarter of next year. They have to program enignes to allow for the “No Appraisal”. So get ready to tell all the callers, yes we can do them, but not until next year. Hopefully rates will still be low then. Would have been better to make announcements until we actaully could do them. Oh yea, lenders are also allowed to add their own credit overlays too, but government is encouraging them not too..
I think this is better than nothing. What would really be helpful is to be able to refinance the loans that have MI on them. Why can’t the government “encourage” the MI companies to transfer current MI payments from one loan to the new HARP lower interest rate one? The MI companies won’t lose anything. And since the new refinanced loan has a lower interest rate and lower payment only stand to gain as fewer loans may default.
Wall Street Journal article said MI companies have agreed to make it easier to do the transition from the current loan to the refinanced one.
The reason valuation is of minor importance is that the subject loans are already owned by Fannie/Freddie…they are on the hook for the money.
Now, pretend you sold a property and provided seller financing.
And let’s pretend that the property is underwater and you and your buyer know it.
Now, what change in terms would YOU offer to make sure that buyer doesn’t walk away?
If anyone thinks about that question for one minute, you should be able to see why we got nothing to lose with HARP, son of HARP, whatever epithet you want to use.
On target, Greg!
Sir – you are the only one I see in any of these responses who understands the value of this. If the taxpayers are on the hook for repayment of a 6.5% loan, why not be on the hook for a 4.5% loan where the owner has a lower payment and incentive to keep making payments. DUH.
You guys need to mention that 80/20 loans are not eligible!!!!!!!
The new HARP is just talk and nothing more. How many people in that time frame took out 1 loan convetional products? Not very many.
Real Estate Marbles website blog sucks!!!!!!!!!!!!!!
True, but major big banks that are 2nd trust holders have agreed to subordinate.
What Banks have agreed to allow subordinations?????????????????
I have done at least 20 of them with subordinations over the last few years
and every one of the 2nd TD lenders were
fine no matter what the CLTV was. All the big 4 banks as well as a bunch of smaller ones and credit unions. Not one has said no on mine.
The only negative here is the first step in making a AVM’s legitamate. Has anyone considered that with out knowning the current condition of property, that the risk could be still ber very high. The home onwer may made all their mortgage payments, and with all their living expenses, leaving nothing for maintenance.
The economy is weak and we could all use more work, including appraisers!
I don’t get the date restrictions either. If the goal is to help underwater homeowners, then help them all. It’s like the first time buyer tax credit that was repayable in full for some buyers and forgivable completely for others based on the date of closing.
This is my biggest concern, get rid of the seasoning date. Anyone who refi’d at 5% is still stuck.
Great job guys! You have no idea how much we need a little good news. This is a GREAT reason to contact past clients – both for lenders and realtors!
Yes, it is a great way to call your buyers that bought around 2007 that are pissed off and give them hope to show you care about them. Some of them are feeling that the reason they are in this position is because we sold them the home and hopefully it will change their feelings.
Baby steps in the right direction folks.
This is only going to help a small number of people and does nothing for those currently in distress. In this program you have to have made ALL your mortgage payments on time and you need to be squeeky clean.
Major short coming is no Re-Harp. How many borrowers used up the refinancing with rates in the 5′s…not can’t refinance since their LTV is say 105%. They are stuck. If we wanted to help everyone, FHFA (and agencies) should have allowed for loans thru 7/1/11.
Why not???
They are not writing down the loan amount. The value simply won’t matter.
I am confussed I have been paying for my underwater house and let say it was for a $100,000.00 and they run an AVM and say it is worth $50000.00
The bank they loans me the money on $50000.00 and then what happens to the other $50000. Is it just gone and I the borrower only have to pay for the new loan?
Where do we sign up? Does this only happen to owner occupied?
Why would the bank want to do this, what is the incentive?
They will do this because Fannie/Freddie owns the loan and are already on the hook for the FULL amount you owe. The other 50K will not go away, it will still be owed.
This is exactly like a streamline FHA w/o appraisal, except FHA only insures the loan.
As I understand it, the AVM is not to establish a value for underwriting purposes, per se. They will be refi’d at their current balances regardless of what value comes back at on the AVM.
I too believe the removal of reps and warranties was a big change for HARP. I made it the emphasis of my post here:
http://www.keaneloans.com/2011/10/25/obama-gives-harp-a-necessary-boost/
Good job guys!
Keane