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| 30 Yr Fix |
6.26% |
-0.11% |
| 15 Yr Fix |
5.78% |
-0.13% |
| 1 Yr ARM |
5.10% |
-0.07% |
| 5/1 ARM |
5.80% |
-0.02% |
| 30 Yr Tres |
4.66% |
0.02% |
| Fed Prime |
5.00% |
-0.25% |
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New Fannie Mae Program May Benefit 150,000 Homeowners
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Another program to aid in the subprime mortgage crisis has been announced by Fannie Mae.
As with most recent initiatives, whether designed by lenders, Congress, or the President, the intended audience of Fannie's program is limited, but it does target a sector of troubled borrowers that has not received a lot of attention - the "underwater" borrower.
Being underwater in the current market means owning more on a mortgage than the underlying security - that would be the house - is worth. Some borrowers actually took out a loan that was near 100 percent loan to value, others have watched their equity disappear as housing prices plummeted. Were the borrower to sell the house or refinance under today's economic conditions he would have to bring cash to the closing table to make up the difference between the loan or sale proceeds and what is actually needed to retire the old debt. (He might be able to convince the existing lender to take a "short payoff" to reduce or eliminate the deficiency but this is a tough sell when the loan is current.)
Fannie Mae's new program would not, as the bill authorized in the House last week does, require existing lenders to write-down mortgages to a level where refinancing is feasible. Fannie will instead refinance new loans adequate to cover the old debt. This does not bail out the borrowers boat - he is still underwater - but might result in a lower payment because of a reduced interest rate, a fixed rate, or a slightly extended amortization period.
Under the new rules Fannie will refinance mortgages at up to 120 percent loan to value and the program appears to be limited to loans that are paid to date and that Fannie either owns or insures.
Fannie estimates that 150,000 homeowners could be helped by such a program.
The thrust of the program is obviously to buy time. Fannie is betting that, by refinancing homeowners, it will assist them in keeping payments current and that in the long-term house prices will improve to a point that these loans will become adequately collateralized. Critics are already saying that this is also a way of pushing losses into the future so as not to impact Fannie's fragile bottom line or capital reserves; that if prices continue to deteriorate more homeowners, lacking equity, will simply walk away.
Still, this new program will provide a place where as many as 150,000 people can hope to find help. Stack enough of these limited-focus programs together, wherever they come from, and the universe of battered borrowers may all find a place for hope.
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Comments (25)
| Once again (Jason), you are blaming the lending institution for mortgage documents that YOU signed. Read what you are signing and perhaps you wouldn't be in the mess you are in looking for a program to quote (not bail you out). Bottom line is that people should not be buying homes if they don't have the money to put down. Then you only put 5% down and want to borrow off that equity. People want, want, want, but can't pay. Read what you're signing and be educated! |
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| Above Posted By:
T
| Mon, 19 May 2008 19:53:45 EST |
| I also think it is a great idea. Does anybody know if this is for conventional loans or is this program only for current Freddie Mac loans? |
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| Above Posted By:
anonoymous
| Thu, 15 May 2008 14:41:33 EST |
| I just got off the phone with CITI. They are NOT participating in this program.
The rep was also kind enough to give me some interesting info. She tld me that regardless of any qualifications for ANY program internal or external, CITI will not modify or work with my mortgage because it originated with Ameriquest.
So, everyone admits that Ameriquest was decelptive, but noone will fix it? |
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| Above Posted By:
JAson W
| Wed, 14 May 2008 17:53:59 EST |
| I agree this is another program that sounds good but in practice will be impracticle. The MI companies are already choking on insuring the loans already made and to think that going even further in the whole does not make sense! But if they can self insure, create relief for those underwater than I say hell yes! But to address the comments posted here that help is for those behind - why they are always behind is not necessarily factual. As in anything, there are some that are habitual. But there are others that went into a payment over what they make or darn nearly...they should be helped.
Ultimately we need to go back to common sense underwriting - provide solid programs that are based on historical repayment - that perform. The stated loan for example created because savvy borrowers were exempting their income from the IRS, so the lender said ok: Based on your credit - I would give you a loan. It did not intend to be for the guy @ Sams Club loading dock! He gets a paystub - period!!!
Anyway - good luck fannie...hope something positive happens before we are all waiting in line for cheese!
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| Above Posted By:
D Fabrizio
| Wed, 14 May 2008 09:58:25 EST |
| I have a situation where Bank of Amer. screwed up and does not take responsiblity for having my mortg. put on credit report 3 x's late, never late in 3 yrs. now I am just words on paper. I have to refi. and I am subprime idiot I love my home I'm proud of my purchase, being a single mother, bringing home the bacon, and this huge financial corp. want retrack, and get me back on track. Sincerely, wanting a reply, RW |
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| Above Posted By:
rosalie,fl.
| Wed, 14 May 2008 08:10:02 EST |
| LOL... what a joke! There is no way in hell that any of the current PMI companies are going to issue a policy over 97% LTV, so this loan program will apply to exactly 0 homeowners. I'd like to sell a beneficial loan program as much the next guy, but it's simply a pipe dream that FNMA isn't going to be able to follow through with. |
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| Above Posted By:
Darren
| Tue, 13 May 2008 17:41:01 EST |
| We need his especially in Maryand . This is nt a bail ou but he banks way keep omewnership alive |
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| Above Posted By:
deizshel
| Tue, 13 May 2008 15:27:08 EST |
| This is lame. So Fannie has decided that its better in the short term to give people a low payment thantopay the piper and take the foreclosure which would hit their insanely low reserve requirements. |
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| Above Posted By:
Jay Jay
| Mon, 12 May 2008 22:47:36 EST |
| How can I get into that new program with Fannie Mae - I have a subprime mortgage and the broker who got me into it is now bankrupt and out of business- He got me into an option arm adjustable rate way way beyond my means and swore to me (he lied) that he would change my rates from a 8.5 to a 6 the following year - this was to be a temporary adjustment - today Im stuck in a mortgage that I cant afford I should have been payng only $1,340 a month but I'm payng $3,500- The broker gave false information to the lending company without my consent and knowledge and today Im living on the verge of foreclosure- Im struggling to come up with the mortgage money each month: it's either mortgage of starving or scrunging for pennies to put gas in the car- The broker knew exactly my financial situation but lied to me in order to enrich himself...today he doesnt care one bit what my situation is he got his money !
Patricia W |
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| Above Posted By:
Patricia W
| Mon, 12 May 2008 22:24:06 EST |
| How can I find out if I qualify? Does the existing loan need to be insured by Fannie Mae to be eligible, and if so, how do I find out if my loan is covered by this program? |
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| Above Posted By:
Pat M.
| Mon, 12 May 2008 19:20:15 EST |
| Does the existing loan need to be Fannie Mae insured or funded to qualify? How do I find out if I am eligible? Who would I contact? |
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| Above Posted By:
Pat M.
| Mon, 12 May 2008 19:03:56 EST |
| So only loans that Fannie Mae already owns are eligible?
I pay my mortgage on time, even though my ARM has reset twice so far and I am underwater 80k on a 300k loan (yes that's right, and that's AFTER adding a brand new addition and also a brand new 1/2 bath).
CITI refuses to work with me. They won't modify the loan because (and I quote), "you have paid your mortgage on-time, we are only modifying loans for people that are like 7 months behind on their payments."
CITI also refuses to refinance me because they say my house is only worth about $210k and my existing mortgage is for $304k.
They also refuse to modify to a fixed loan because (another quote), "You still have a some money left at the end of the month after paying all your bills." Ya, I have like $200 left at the end of the month using their "formula", but that doesn't compensate or adjust for fluctuating gas and food prices.
When I ask how exactly I am supposed to save money so I can afford the new roof my home needs, they respond with silence.
The government sent me $800 to "settle" the damage that Ameriquest incurred on me with their "deceptive" practices.
Yeah, that helped, thanks.
This Hope Now program I hear about on the news couldn't help either, they are only for people months behind on their loans...
Where exactly is the help for the people that have managed to stay current and have the best shot of actually keeping their homes with a tiny bit of help?
I don't understand, I don't want a hand-out, I just want someone to acknowledge the problem.
Ameriquest sold me a junk loan on junk terms using deceptive practices, that $800 obviously didn't help, why won't Fannie Mae refi me to a fixed rate?
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| Above Posted By:
Jason
| Mon, 12 May 2008 18:38:26 EST |
| Well as a lender i can see where MI would be a factor because right now MI companies are not in line with Fannie or Freddie. This kills more loans than i can complain about. Also how many are projected to be helped 150K out of how many people that need the help, looks like only a fraction. The other thing that i see is that people walk away from homes when there upside down how does this loan help by acknowleging that there upside down and for home prices to come back to where they were i think we already learned that house prices peaked to fast and to high. For those who bought when house prices peaked i dont likely see them that high for awhile if ever. This is a gun without the bullets |
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| Above Posted By:
George
| Mon, 12 May 2008 18:36:14 EST |
| Chris is right! No PMI company will insure the loan, and, on top of that the property will be in a Fannie "Declining Market" (afterall the borrower wouldn't be upside down unless the market was declining). So, by the time you take the 5% off the LTV for the Declining Market, hit the borrower on rate because their credit score is ONLY 719, and add a HUGE premium for some special MI program.......... this program will be as successful as. well, the FHA Secure!!!! Sorry for the Sarcasm, but I am sick of desperate borrowers calling for these programs and having to explain to them that they really aren't designed to help them.
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| Above Posted By:
Rebecca
| Mon, 12 May 2008 17:04:36 EST |
| This proposal is more fluff...show me the beef baby, otherwise it's not worth a fart in the wind.
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| Above Posted By:
LumberGuru
| Mon, 12 May 2008 12:17:57 EST |
| This is a joke like there other programs, by the the time lenders ad risk based price adjustments and FICO score hit's and all the other hair banks attach, because they can, no one will get a loan no one will get help. |
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| Above Posted By:
Brian
| Mon, 12 May 2008 12:05:50 EST |
| I think that what is missing in the advisement is, qualifying for the new 120% loan. What is it? Also a lot of people who are 'bottom up' have seconds that are not government loans. ?? What about them? |
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| Above Posted By:
Larry Littlejohn
| Mon, 12 May 2008 11:37:51 EST |
| When was this new program started or when is it going to be in effect? Also, which main lenders will be carrying this type of program? Please let me know. Thank you! |
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| Above Posted By:
Steve
| Mon, 12 May 2008 11:11:00 EST |
| How in the hell are you going to get MI on a 120ltv??? Nice attempt to hold people accountable for their own poor investment decisions, but the MI will kill it.... |
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| Above Posted By:
dan
| Mon, 12 May 2008 11:04:54 EST |
| OK. Here's the problem. Fannie decides to lend up to 120% but when the lender trys to get pmi to 120%, pmi denies the claim and only allows to 97%.
Government, fannie, and mgic (and etc) need to be on the same page here!
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| Above Posted By:
Chris Graves
| Mon, 12 May 2008 10:52:04 EST |
| are certain banks already going by this new instituted guideline by fannie mae ? |
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| Above Posted By:
anonymous
| Mon, 12 May 2008 10:48:18 EST |
| now the real questions is how would i get a hold of the list of people that could use the help in California. can anyone help.
thanks,
Sal |
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| Above Posted By:
sal
| Mon, 12 May 2008 10:23:09 EST |
| FINALLY!!!!!
COMMON SENSE!!!!
I've moaned and groaned about this over and over again....
DO NOT REWARD THE PEOPLE WHO ARE NOT PAYING THEIR MORTGAGE BY GIVING THEM A 15% DISCOUNT AND LOWERING THEIR PAYMENTS!!! These are the people that just don't pay no matter how much the payment is.....
DOOOOO
DOOOOO
DOOOOO
Help those who do make their payments on time and are upside down in their mortgage, but worse, they have an adjustable rate mortgage.... THESE ARE THE PEOPLE WHO PAY THEIR BILLS, THESE ARE THE ONES THAT NEED THE HELP KEEPING THEIR HOMES!!!!
The kicker is, how many ADJUSTMENTS are they going to get HIT WITH because they go over a 100%ltv!!!
This is Good news... |
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| Above Posted By:
Kevin
| Mon, 12 May 2008 10:18:00 EST |
| When does this take effect ?
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| Above Posted By:
anonymous
| Mon, 12 May 2008 10:15:18 EST |
| I think this is a great idea for both reasons stated. It will give the borrowers' affordability by lowering the payment and it will buy Fannie time in the hope that real estate values will eventually increase. If a borrower wants to stay in the home and the only issue is that the payment is a strain then a lower payment solves that problem. If a borrower can make the payment, why walk away? I can see people who NEED to sell feeling more desparate and walking away. The plan will also come as a boon to loan originators(which I am) adding another product that will help keep us writing loans. Have a GREAT day!! |
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| Above Posted By:
BOB BEAUBIAN
| Mon, 12 May 2008 09:30:05 EST |
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