Short Sale, Foreclosure or Refinance???
Posted on | July 14, 2009 | Written by: Diane Donnelly
Mortgage payments are harder to make. Credit card account balances are increasing. Interest rates have increased. Hours at work have been cut and you are no longer receiving overtime pay.
The current economic environment has met homeowner’s finding it more and more difficult to meet the obligations of their mortgage payments.Â
As evidenced in previous blogs, there are viable options for these struggling homeowners. However, I will discuss the newest option that Obama has introduced.   In the “Home Affordable Program” the loan to value (LTV) was increased from 105% to 125% for Fannie Mae and Freddie Mac loan programs leaving the homeowner the ability to refinance his mortgage even if he is upside down.Â
According to Zillow, 22% of homeowner’s are upside down nationally. That is, 22% of homeowner’s nationwide owe more on their mortgage than their house is worth. Consider that for a moment. Nearly 1 in 4 homeowner’s are in financial trouble regarding his real estate investment.
The new program will afford some of these homeowner’s the option to refinance their mortgage even if they are upside down. For example, if a homeowner owes $300,000 on his mortgage, but the value of his home is only $225,000 (25% of the mortgage balance), the new home affordability program will allow this homeowner to refinance IF he is not late on his mortgage currently.
If you are curious if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, log onto www.freddiemac.com/mymortgage.
The results are two-fold. First, you will be able to reduce your monthly payment by reducing your interest rate.  Secondly, you can reduce your monthly payment by increasing your mortgage term to 30 years.
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Tags: Economic environment > Fannie Mae > foreclosure > Freddie Mac > Home Affordable Program > Homeowner's > interest rates > Loan to value > LTV > Mortgage Payment > Mortgage Payments > Real Estate > Refinance > short sale > Struggling homeowners > Upside down
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One Response to “Short Sale, Foreclosure or Refinance???”
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July 20th, 2009 @ 3:02 pm
Hello Diane,
I read your SHORT SALE, FORECLOSURE OR REFINANCE??? post, this is Great information and this program could help so many people across the nation and in our area. Unfortunately the program has not been able to reach the general public yet. There seems to be a battle between the Banking industry and Fannie Mae & Freddie Mac (the government). As the story goes, the banks began to lend again based on the Fannie Mae / Freddie Mac streamline guidelines and the assurance that these government agencies would again purchase these loans in bulk as they were purchased in the past. When the first program was introduced, the banks began to lend and many homeowners were able to refinance. It seemed as though everything was beginning to get back on track. When it came time to deliver the loans to these agencies, as the story goes, Fannie & Freddie weren’t buying like they said they would. This left the banks with thousands of loans remaining on their warehouse lines, and thousands of new loans which they didn’t know what to do with. As a result back logs soon followed, many institutions falling back into the liquidity issues which they were trying to get out of. To fix this, Banks began to tighten underwriting standards and many “good loans” became rejected loans. Moving to today’s lending environment. Some lending institutions have decided to participate, (if they have room on there credit lines) while others have decided to not participate and sit on the sidelines until things normalize. I’ve also recognized a disappointing trend; some lenders have begun to charge application fees to clients, knowing their company will not approve the loan. This week I was able to save a client $895 on an application fee, not to mention the $400 appraisal fee. But more importantly I can get their loan approved. BTW, I do not charge application fees, or GFE fees (another growing trend). Moving forward for mortgage consumers, now more than ever, borrowers need to realize credit underwriting standards have tightened, however loans can be approved. It depends on the company you are working with. Individual mortgage companies and large institutions are placing their own set of rules on top of the Fannie Mae and Freddie Mac rules. Some are more restrictive than others. Consumers need to assure themselves that they are working with a responsible mortgage professional, but more importantly one who is with an institution or company who deliver lending options. I’m not talking about programs; I’m saying sources of funds. When one mortgage company decides to pull back, you must have the ability to place this loan with a company who is comfortable lending the money. To compound this issue, the HVCC has made this process even more delicate. Knowing who to deal with and having options from the start of the lending process is what is saving clients money, time and heartbreak.