Mortgage Lenders Nationwide

Let’s read and evaluate the info on which borrowers get mortgage relief and which homeowners are being hung out for foreclosure.  Learn more about what mortgage lenders will be encouraged to participate.  Clearly the Obama administration has incentives to mortgage lenders who cooperate with the Government initiative that request lending companies extend loan modification plans to struggling homeowners.

Watch Obama Home Mortgage Relief Video

One of the early surprises was the scope of the mortgage refinancing plan. In case you haven’t been paying attention, this part of the program is aimed at responsible homeowners who would like to refinance to today’s low interest rates but are prevented from doing so due to falling home values.

We had originally been told that only “conforming” loans would qualify for this departure from conventional “loan to value” guidelines. In other words, the benefit would only be available to borrowers whose loan balance was less than the Fannie Mae maximum loan amount of $417,000.

See that the details of the plan enabling FHA home refinancing up to a current balance of $729,750. This part of the plan makes good sense, and here’s why:

> The foreclosure prevention plan is only available to borrowers submitting owner-occupied properties who are not late on their existing mortgage payments.  Statistically speaking, this group of homeowners is less likely to default on their home loans.

> The refinance and modification program is only available for home loans which are owned or guaranteed by Fannie Mae or Freddie Mac. Since the government is already on the hook for these loans, it makes sense to make them affordable, in an effort to stem the foreclosure crisis.

> Borrowers must be able to qualify for the terms of the new, lower rate home mortgages and prove enough income so that the new loan is affordable and sustainable. Unlike the modification plan, this refinancing is not temporary.

> Under a typical refinancing, the maximum loan is 80% of the home’s current appraised value. That has been the sticking point for many of these borrowers. But under this program, the loan can go as high as 105% of the appraised value of the home. This change is critical to the mortgage relief program. It reflects the realization that dropping home values in a neighborhood don’t make a borrower less likely to pay on time.  Read the complete article >

The Federal Reserve has positioned as a buyer in secondary mortgage markets that had seized up but are vital to enabling lenders to make new home loans.  Mortgage lenders sell many of their loans to institutional investors, and higher rates charged by these investors to hold pooled bad credit mortgages make it more difficult for loan officers and mortgage brokers to offer lower rates on new mortgage loans. Conventional and FHA mortgage rates were both slightly lower than the previous week. 

The gap has narrowed in just a few months between Treasuries and the mortgage rates that the agencies and mortgage lenders have to carry to make them attractive.  Read the original article > Mortgage Interest Rates Drop.

Was it predatory lending or was Wall Street and mortgage lenders simply rolling the dice too much?

Watch 60 Minutes/CBS News Interview on Predatory Mortgage Lending

Paul Bishop’s post “60 Minutes” interview on CBS Morning Show.  World Savings’ Paul Bishop spoke with Harry Smith about when he first noticed the company was taking on high risk home loans. 

For the mortgage refinance program, only homeowners whose loans are held by Fannie Mae or Freddie Mac are eligible; they have until June 2010 to apply.  Consumers should contact their loan servicing company that sends out their monthly bill to find out if their mortgage liens are held by Fannie or Freddie. The two mortgage finance companies own or guarantee almost 31 million home mortgages more than half of all U.S. home mortgage loans.

Mortgage lenders can reduce a borrower’s interest rate to as low as 1% for 3 years, 2% for five years. Mortgage interest rates would then rise to about 5% until the mortgage is paid back.  If the loan workout plan works as proposed, it could be a big plus for borrowers like Nick Kavalary, a network cable installer who lives outside Milwaukee.  Kavalary, 42, has been struggling with JPMorgan Chase & Co. to get a loan modification. He was finally approved for one this year, but it only lowers his mortgage rate from 10.75%. to 9.8%.  Even at the lower mortgage rate, he said, making the loan payment is nearly impossible.  “If I can’t pick up a 2^nd job, I’m going to lose this home,” he said. “With the job market being the way it is, nobody’s hiring anybody.”

Meanwhile, action to put in place another part of Obama’s housing plan is expected soon on Capitol Hill.  A few days ago, the House Democrats agreed to narrow proposed legislation that gives bankruptcy judges the power to change the terms of mortgage loans for borrowers distressed with debt.  The latest version of the mortgage relief bill would have the court’s judges considering whether a homeowner had been offered a reasonable loan by the bank to restructure his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to document that they had previously attempted to renegotiate their home mortgage.