Faith and Finance

Hello Friends, So many questions, so much uncertainty still. As much detail as there is on the US Treasury’s website and the press releases that went out Wednesday, things are still clear as mud! Mainly due to the fact that the investors and servicers of these new potential mortgages are not required and most likely, in a lot of circumstances will not want to touch some of these loans. If you go to www.neliton.com, I have a Q & A format of the top anticipated questions on the refinance initiative and if you want the confusion right from the “horse’s mouth” then you can go to the Fed’s site at www.financialstability.gov The major positives with this initiative if this truly comes to fruition; 1.Loan to value up to 105% of the value with no mortgage insurance. 2.Lifted or reduced credit score penalties. 3.Automated valuation where an appraisal will not be required in many cases. 4.Limited or reduced allowable closing costs to protect the borrower from high fees. The major concerns that have not been addressed which may cause this program to be a big flop like the FHA Secure Program and fhas Hope for Homeowners crash and burn where the program was cancelled months after announcement of the programs because again, not bank or private investor wanted to take the unnecessary risk associated with the guidelines; 1. Investors or banks still have to agree to the program as the Feds cannot dictate or force participation in the program or restrict the investor from implement their own overlay of more restrictive guidelines. 2.Second loans may not be allowed in the refinance and will not be allowed if the second loan was not “purchase money” used initially in the financing of the original and has been drawn from or refinanced after the original second loan. 3.So many American’s have racked up debt due to their mortgage payment jumping or loss of income but consumer debt cannot be consolidated with this program so no cash out or debt pay-off outside of the first mortgage in most cases. 4.If there is a second loan, the second lien holder or lender has to subordinate and agree to “go behind” or be in second position again on title behind the new first loan which is very unlikely. With a recent subordination attempt for a client of mine last week with Chase Mortgage, they denied the subordination and said they would only subordinate with a maximum combined loan to value of 65%! What the heck, that pretty much eliminates all opportunity for their clients, and the client was going to be saving $410 a month on their new first loan! For now, so much uncertainly and a lot of head scratching going on. Assuming best case scenario, Fannie Mae announced Friday that their “DU” or Desktop Underwriter” system would not even have the new guidelines or criteria uploaded where their automated system could provide “findings” until early April and Freddie Mac followed up reporting mid-May for their “LP” or Loan Prospector system would be updated. Stay tuned… Be Blessed!