Mortgage Updates

On February 20th a letter went out to Suzanne Hutchinson EVP of Mortgage Insurance Companies of America from James Lockhart, III. (Director Federal Housing Finance Agency and Chairman, FHFA Oversight Board.)  This letter outlined some much needed assistance for homeowners not delinquent on their loans, to refinance even with loss of equity.  Furthermore, if the new loan (including financed closing costs) exceeds 80% LTV in today's value market...and mortgage insurance is not part of the current payment (either through the previous removal through equity build up or through a 20% down payment at the original purchase) no new mortgage insurance will be required by FNMA or FHLMC.  This is a significant development for homeowners especially in hard hit declining market areas. 

Says Lockhart, "....creating an avenue for the borrower to reap the benefit of lower mortgage rates in the market, the credit risk of the Enterprize diminishes; thus, this is a loss-mitigation initiative in this very troubled time in housing finance.  It has the added benefit of helping many households strengthen their own financial situation and enhance their commitment to their home and community." 

In addition, the mandate is for current mortgage insurance providers to "carry forward existing MI coverage from the old loan to the new loan without any increase."  In the decling market areas of CA this is significant, since Mortgage Insurance Companies have back out of the market by refusing to insure new transactions exceeding 85% LTV.  It will be interesting to see how this will play out.

Of course the whole idea is for homeowners to be able to take advantage of low rates. -That is where the kicker comes in... Wouldn't you know there would be one???  Early review shows that pricing for these loans will still be costlier for credit scores under 700 and in "adverse" markets. (Another name for declining markets) add higher Loan To Values (up to 105%) and that fantastic rate may become hohum.

To watch for further details and updates in my blog-subscribe...

To find out more about your potential to qualify for this program click  here.