125% Mortgages?
by Tom on July 2, 2009
in Market Musings, banks
HUD made the announcement that Fannie and Freddie are going to start doing refinance transactions up to 125% of the value of the homes. There are particular rules and regulations that I’ll get into more when I write my Mortgage Market Week in Review. I’m going to write that tomorrow (Friday) so if you aren’t already on the list, sign up for your copy now in the column on the left.
A couple of quick reactions:
- These are only rate and term refinance loans, so all they can pay off is an existing mortgage that is currently with either Fannie or Freddie.
- This is a risk reduction strategy for Fannie and Freddie. The thinking is that they can hopefully avoid some foreclosures by lowering payments.
- Due to rising interest rates and recently (at least as far as I know, recently) instituted credit score and loan to value pricing adjustments and ongoing employment challenges, I think the number of loans that will happen through this program are a lot less than the government is predicting.
More on it later……
Tom Vanderwell
HUD Allows 125% LTV in Home Affordable Refis : HousingWire || financial news for the mortgage market
The administration expanded its Home Affordable Refinance Program to include borrowers current on payments but whose mortgages are worth up to 125% of the house’s value.US Department of Housing and Urban Development (HUD) secretary Shaun Donovan announced the LTV limit expansion today while touring a Las Vegas neighborhood–a befitting venue for the reveal, considering 67% of homeowners there are underwater on their mortgages.
