Archive for March, 2010
FHA Mortgage Loan Programs Expand
Posted by: | CommentsConsumers and mortgage lenders continue to reap the benefits of FHA home loans that boast low FHA rates. The Association of Mortgage Investors announced their support for the second mortgage program announced by the Obama administration to provide a path for reduced principal through a mortgage refinancing program for homeowners who owe more on their mortgage than their house is valued at. Micah Green, an attorney who represents the Association of Mortgage Investors said, “Investors have long felt that the only way to provide homeowners further mortgage relief is to address the affordability and loss of equity issues.” Many home finance executives believe that this step is crucial for the housing market to mend itself long-term.
A few days ago, FHA announced a variety of new home purchase and refinance programs intended to help reduce the number of new home foreclosures. The FHA loan initiatives range from a forbearance plan for unemployed borrowers, to new incentives that encourage principal reductions, to a new FHA refinance option, for which lender participation is voluntary. “Importantly, there are many details of the FHA guidelines that need to be clarified from the latest FHA announcement like, how second mortgages are treated, to ensure that the homeowner’s total debt burden is not excessive,” Green said. 1st and 2nd mortgage investors must be committed to sharing the burden of providing principal reduction in order for troubled homeowners to achieve sustainable relief that will be provided by a properly sized refinanced FHA mortgage, Green says. “This program should also respect the priority of liens. Therefore, principal reductions of senior and junior liens should be carried out accordingly,” he says. FHA mortgage refinancing remains popular with lenders and brokers across the coountry, so chances are HUD will keep FHA lending around.
Second Mortgage Refinancing
Posted by: | CommentsJust a few years ago second mortgage loans were relatively easy to qualify for and many homeowners utilized them for debt consolidation and to receive cash out. Borrowers with good credit could qualify for a low rate second mortgage or an interest only home equity line of credit with no equity required. Some borrowers actually qualified for a 125% second mortgage that enabled consumers to borrow more than their homes were worth. Homeowners liked these 125 home equity loans for consolidating debt and financing home improvements. Borrowers also used second mortgages as purchase money in an effort to avoid private mortgage insurance when buying a home.
Today second mortgages are hard to find. First mortgage refinancing is back in style again. Very few traditional lenders are offering home equity loans or credit lines because of the credit crunch and the high default rate of second mortgage liens over the last four years. It is unfortunate because thousands of borrowers are looking for second mortgage refinancing, because they got stuck with an adjustable rate HELOC. Refinancing these 2nd mortgages into a fixed interest rate makes sense financially. If you have a little bit of equity we recommend refinancing your 1st and 2nd mortgage together with a FHA mortgage. The government loans enable borrowers to get cash out with refinance loans at 85 to 95% loan to value.
MGIC Adjusting to Compete with FHA Loans
Posted by: | CommentsFixed rate refinancing remains in high demand for homeowners who have an adjustable rate mortgage, but have not been able to qualify to refinance because their home is worth less than the their mortgage balance. Reuters reported last week that MGIC Investment Corp who is the largest home mortgage insurer in the United States, reduced its premium rates in an effort to recapture market share lost to FHA loans insured by the Federal Housing Administration. FHA mortgage rates have remained competitive with conventional interest rates since 2007.
The low mortgages rates have been available to consumers with high credit scores. Higher interest rates will be offered to borrowers with lower credit scores under the new pricing system. According to mortgage advisor, Sandy Sarconi, “MGIC may be too late reacting to FHA because they have taken 30% of the market-share.”
Presently, FHA loan guidelines do not consider credit scores when pricing its insurance for FHA mortgage loans. The new prices will be effective May 1, the company said. In January, MGIC reported its tenth straight quarterly loss because of increasing delinquencies. More and more homeowners are failing to make their mortgage loan payment on time. The company did make a statement that they anticipate home loan delinquencies to reduce towards the end of 2010.
