Posted on 07/01/2009 5:55:11 PM PDT by CutePuppy
Homeowners taking part in the Obama administration's housing rescue program through Fannie Mae and Freddie Mac will now be eligible even if their loan-to-value ratio is up to 125 percent. That means they can have up to 25 percent negative equity and still get a refinance.
The rule changes, part of the government's attempts to restore housing affordability and stem the foreclosure crisis, apply to loans backed up by Fannie Mae and Freddie Mac.
Previously, homeowners could borrow up to 105 percent of their home's value. The new loan-to-value ratio is set up at 125 percent in a further effort to address those mortgage holders who owe more than their homes are worth.
"By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly,'' Treasury Secretary Timothy Geithner said in a statement.
The government earlier this year enacted the Home Affordable Refinance standards in response to the rash of defaults and foreclosures that have occurred as national housing prices have plummeted.
The new LTV rate will be offered only to borrowers who are current on their mortgages that are owned by either Fannie or Freddie.
"This is a change that will put affordable refinancing opportunities within reach of performing borrowers who have suffered the effects of local home price erosion," Freddie Mac Executive Vice President Don Bisenius said in a statement.
Home values in many markets have sunk by 18 percent in the last 12 months, according to Standard & Poor's/Case Shiller home price index.
.....
In a separate move, the government is encouraging borrowers to take advantage of a chance to lower their mortgages from 30-year to 25-year in order to save on interest charges.
The government will reduce the processing fee for borrowers who take advantage of the 25-year option.
(Excerpt) Read more at cnbc.com ...
Nuts
Some of the same ol’ sh** that started us down the road to economic ruin. I guess they’re making sure they get the job done destroying us this time.
The problem nowadays is that you can’t parody the stupidity of the Government because they’ve done it for you.
Inflation, wild, runaway, double digit inflation is the only ‘rational’ way out of the mess we’re in.
125% loan-to-value today is 65% loan-to-value in 10 years.
$1.50 for First Class postage, $8 for milk and $10 for gas.
Inflation is how governments usually ‘finance’ their obligations. Unfortunately, they keep taking on more obligations with already inflated / devalued currency.
And the beat goes on...
Ahh...Isn't that what got us where we are today?
"We are from the government. We are here to help."
New loans to crash and burn...
They are out of control. An armed revolt will be comimg and will be necessary.
This only makes sense if the investor is already on the hook for the loan anyway and the loan does not increase the term or the loan amount. Yes, they may get a lower interest rate but if they have a greater chance of at least getting the principal back, it may be better than a default.
Now, as complicated as Freddie and Fannie are, I don’t see how this can work out because investors are going to shy away from these loans if they are smart and who is going to end up buying them?
When will freedom day come, when there is nothing left to take away from freedom?
Oh yeah. Let's have the government fix mortgage lending.
Maybe our military can study in Honduras!!!
OK wait a minute...how does this work? If your mortgage is higher than the value of the house, whether by devalued house or you got a line of credit or cash on top of the mortgage, how is refinancing with an even higher disparity going to do anything but put you in a deeper hole?
Details, details...
How could such a rule not increase the loan amount? If the borrower already has more than negative 25% equity, all this is going to do is to encourage the irresponsible borrower to borrow more “equity.”
If the borrower somehow has less than negative 25% equity, obviously the rule won’t help either.
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