The new mortgage loan modification program looked to address a critical component in its efforts to stem the foreclosure crisis.  According to Credit Suisse Group nearly 50% of delinquent borrowers have a home equity loan. Many mortgage executives complained to the administration a few months ago because their $75 billion mortgage bailout program had no plans to re-work equity loans in 2^nd position.  Investors, who include pension funds, insurance companies and hedge funds, say that rewriting the first mortgage without touching the second violates their rights, because second mortgages are supposed to be repaid second. Critics also pointed out that Obama’s first plan had a conflict of interest, because many mortgage loans are serviced by big banks that also hold home equity loans.

Under the revised home equity loan relief plan, mortgage-servicing companies that participate in the loan modification program for second mortgage liens must automatically renegotiate the2nd mortgage when the 1st mortgage was reworked. The US government will share in the cost of reducing the interest rate on second mortgages for five years. As an alternative, it will pay holders of home equity loans to relieve their unpaid debt.

Mortgage-servicing companies that modify second mortgages will receive an upfront payment of $500 and additional payments of $250 a year for up to three years for successful modifications of home-equity loans and other second mortgages. Homeowners who do not fall delinquent on the modified equity loan would receive payments of $250 a year for up to five years that would be used to pay down the balance of their first mortgage. The revised plan also encourages the use of the federal Hope for Homeowners program, which allows borrowers to refinance into a more affordable, government-backed loan, provided the investor who holds the mortgage agrees to a principal write-down.

According to Lawrence Yun, chief economist of the Realtors’ group, the number of home foreclosures may rise to 2.5 million this year and that would be the highest since keeping records of home loan defaults.  “The foreclosure wave we’ve been through is not over,” said Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia. “That’s why we don’t see a bottom in housing yet.”

According to Seattle-based real estate data service Zillow.com. About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31st.  After the Federal Reserve pledged to acquire as much as $1.25 trillion in mortgage-backed securities to free up money for mortgage loans, mortgage interest rates fell to a record low of 4.78 percent twice in April. Rates began climbing last month on investor concern federal spending will fuel inflation.�

Home Affordable Refinance provides two Refi Plus™ options for Fannie Mae lenders to provide Fannie Mae to Fannie Mae refinance solutions to eligible borrowers: 1) Refi Plus, which requires manual underwriting, and 2) DU Refi Plus™ for mortgage loans underwritten through Desktop Underwriter® (DU®). FHA home loans continue to be the most popular method for refinancing adjustable rate mortgages into fixed rate loans.

If you are negotiating a lower rate with your lender on a loan modification and they come back with a proposal featuring fixed interest rates under 5% on your delinquent mortgage, we strongly recommend considering accepting these loan terms.  Like mortgage loan modification expert, Jeff Morris said in a recent article, “The low rate loan modifications won’t be around forever.”  Morris continued, “With inflation and foreclosure losses, at some point the interest rates will jump significantly.”

The average rates on thirty-year conforming fixed rate mortgages came down to 4.84 % from 4.95 %. FHA mortgage rates dropped to 4.875% from 4.95% the previous week. The FHA home loans remain a popular loan for borrowers looking to purchase or refinance into a lower rate home loan.  While jumbo thirty-year fixed rate mortgage loans were only down 0.05% to 6.12% from 6.17%. Fifteen-year conforming fixed rate mortgages came down to 4.55% from 4.62%. The average rate on fifteen-year jumbo mortgage rates was pretty much unchanged at 6.01% from 6.02%.

Average interest rates on a home equity line of credit went unchanged at 4.74%. The average home equity rate difference between a 10-year and fifteen-year home equity loan is still over 3 %. Average rates on ten-year home equity loans were also unchanged at 4.6%. The average rate on a fifteen-year home equity loan was also unchanged at 7.81%.

A record low of 4.78% for a thirty-year fixed-rate mortgage was first recorded on the week of April 2nd and again on the week of April 30th. Freddie Mac’s mortgage rate survey dates back to 1971.  Mortgage interest rates fell significantly over the winter. The rates declined again after the Federal Reserve said in March that it would buy $1.2 trillion in mortgage-backed securities and $300 billion in debt, which in most cases impacts rates for 30-year home loans significantly whether refinancing or home buying.

Obama Outlines Mortgage Foreclosure Rescue Plan

www.youtube.com/watch?v=0ifMPAvvcek

California posted the nation’s second-highest state foreclosure rate in January, with one in every 173 housing units receiving a foreclosure filing during the month.  Such filings were reported on 76,761 California properties, the most of any state despite a 14% decrease from the previous month. The state’s foreclosure activity in January rose 34% from the previous year. Governor Arnold Schwarzenegger recently signed into law a bill that requires loan servicing companies who haven’t already set up mortgage loan modification plans in California to hold off on home foreclosures for at least ninety days.

www.youtube.com/watch?v=9HXtRWkRUSw

1. Mortgage refinancing option that promotes a fixed rate home loan

2. Restructuring their mortgage with a federally backed loan modification.

Borrowers need to be at 105% Loan to Value or Less to qualify for the refinance option.  Borrowers need to be able to document income.  Must be current on your mortgage and have your mortgage backed by Fannie Mae or Freddie Mac.

With the home affordability mortgage loan modification, the housing payment must exceed 31% of your monthly gross income.  Mortgage rates are 2% with 30 or 40 year terms.  Principal reductions may be available as well.  Maggie Rodriguez spoke to Ray Martin about how to find out if you are eligible for help from President Obama’s mortgage plan. 

Loan Modification Expert Moose Scheib on Fox News with Neil Cavuto

Neil Cavuto talks about the impact that principal reductions could have on the housing market. Loan Modification expert and CEO of LoanMod.com, Moose Scheib discusses the current foreclosure crisis and the role loan modifications have in stabilizing the housing market on The Neil Cavuto.  Mortgage loan modification programs and FHA home loans continue to dominate the home loan spectrum for 2009.

They talk about the Obama mortgage rescue bill and new bankruptcy law reforms that would enable bankruptcy judges to restructure loans and even reduce principal loan balances for homeowners filing for a chapter 13 bankruptcy filing.  The mortgage refinancing experts debate the re-defaults data on borrowers who recently had their mortgage restructured.

Regulators and bank executives are operating under the assumption that reducing foreclosures will slow record drops in home prices. In turn, this will help stabilize the financial system – and, by extension, the economy as a whole.  Most foreclosures are concentrated in communities that built large developments, using cheap financing to help fuel speculation and massive over-valuation. These areas, especially those where homes were purchased by lower income buyers, are being decimated by delinquencies and repossessions.

What main mortgage insiders are concerned about is the crisis broadening:  More and more delinquencies are being reported in the prime mortgage loan market where borrowers with good credit scores have begun to miss home loan payments with alarming frequency.  The most recent mortgage delinquency data suggested that defaults on subprime mortgage loans are occurring at measured pace than in recent months, good credit homeowners are beginning to show more and more delinquencies

“The increase in prime ARMs foreclosure starts was greater than the combined increase in fixed-rate and ARM subprime loans. Thus the foreclosure start numbers will likely be increasingly focused on by refinancing ARM loans with fixed rate home mortgages.” There is still a wide misconception that only “subprime” people maxed out credit cards, took out loans they couldn’t afford, and were generally reckless with their personal finances.   As the economic slowdown swirls outward into the broader economy, cracks are starting to form in established neighborhoods that have thus far experienced minimal home price depreciation.  FHA home loans continue to dominate the origination for purchase and refinance

As mortgage refinance underwriting requirements have tightened in recent months, home buying has slowed in these more well-to-do areas. This trend is being masked by spikes in the distressed sales driving broad housing market indicators.   As layoffs continue, borrowers in these regions will be forced to sell for the first time in years. The illiquidity in these markets means it will take just a few such sales to readjust prices dramatically downward. Homeowners that don’t sell by choice, particularly if they’ve accumulated equity in their homes, are apt to be less picky about their price.