March 8th, 2012 4:38 PM by Richard T. Cirelli
More Help for Underwater Homeowners?
There has been a lot of press about the enhanced programs to help homeowners who are underwater to refinance. If you owe more than your home is worth, there are two programs that may benefit you.
If your Loan is Owned by Fannie Mae or Freddie Mac:
These agencies own about 50% of the mortgages in the U.S. If your current loan is owned by Fannie Mae or Freddie Mac, and you are underwater, more homeowners are about to be able to take advantage of some changes in the Home Affordable Refinance Program known as HARP2.
Here are the main things to look for regarding HARP2 loans:
Keep in mind that not all details are known yet. The program should be widely available by April 1st.
· Your loan must have been closed before May 31, 2009
· The current loan-to-value (LTV) ratio must be greater than 80%. There is no longer a cap on the maximum Loan-to-Value ratio
· The mortgage cannot have been refinanced under HARP previously
· No Mortgage Delinquencies in the past 6 months and no more than one mortgage delinquency in the past 12 months
· No Foreclosure in the past 7 years
· Short Sales must be at least 4 years
· Appraisals – In many cases, borrowers won’t have to pay for a new appraisal. Fannie or Freddie will use their automated appraisal system
· Limited Documentation will be available for some borrowers
· 2nd Mortgages Must Resubordinate - Borrowers can have a second loan of any amount and still qualify, as long as the holder of the second mortgage re-subordinates it to the new loan. Most of the big lenders have agreed to do so, but there is no guarantee they or others will
· Mortgage Insurance Must Transfer – If borrowers have mortgage insurance on the existing loan, they must maintain it, but they should be able to transfer that insurance to the new loan at the old premium rate, according to Freddie Mac. The big mortgage insurers have agreed to allow this, but again there is no guarantee all will.
There are still many questions about the program, such as the interest rate, whether lenders will impose additional fees or underwriting requirements beyond what Fannie and Freddie require, and whether investors will be willing to buy securities backed by these new HARP 2 loans.
We’ll keep you posted, In the meantime, see if your loan is owned by Fannie or Freddie.
How to find out if Fannie Mae or Freddie Mac owns your loan:
The following websites will determine whether either of these agencies owns your loan:
Fannie Mae: http://www.fanniemae.com/loanlookup/
Freddie Mac: https://ww3.freddiemac.com/corporate/
What If You Have an FHA Loan?
If you have an FHA loan rather than a loan owned by Fannie or Freddie, the Government just announced some major enhancements to the FHA Streamlined Refinance program.
Until now, homeowners with FHA-backed mortgages who use FHA's streamlined refinancing program were charged an up-front mortgage insurance premium of 1 percent of the outstanding loan balance and an additional 1.15 percent as an annual premium. In most cases, the high cost of the mortgage insurance negated the value that might have been gained by a lower interest rate.
Now, FHA is reducing the upfront premium from 1.0% to just .01% and cutting the annual fee from 1.15% to 0.55 percent. To be eligible, your exiting FHA loan must have been originated before June 1, 2009
3.5% Down Payment if you are Buying:
If you are buying a new home, FHA down payments are only 3.5% of the purchase price with loan amounts up to $729,750 in many California Counties. The higher mortgage insurance premiums still apply, but if your down payment is limited, this is the best way to finance that home you want to buy.
Link to Last article: Short Sales are Anything But Short and FHA Loan Costs Rise Again:
My last article contained a glitch that caused a dark background and made it difficult to read. If you missed it or want to re-read it, click this link:
FHA to Increase UFMIP to 1.75 for New FHA Loans
As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, Acting FHA Commissioner Carol Galante today announced a new premium structure for FHA-insured single family mortgage loans. FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. Upfront premiums (UFMIP) will also increase by 0.75 percent. These premium changes will impact new loans insured by FHA beginning in April and June of 2012. Details will soon be published in a Mortgagee Letter to FHA-approved lenders. “After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”