Apply Again for a Mortgage Refinance After Denial, Rosemary Rugnetta,

Despite what has been heard about the mortgage market for the past several years, it is not all gloom and doom for everyone. More homeowners are not underwater than there are those that are underwater. Even today, mortgage refinance applications are still up and providing existing borrowers the opportunity to obtain the current lower mortgage rates available. Applying again for a mortgage refinance after receiving a denial is a must for existing homeowners since there is a good chance for approval.

Many borrowers are or have been denied a mortgage refinance for some reason or other. The denial is often the result of a particular lender’s guidelines that were in place at the time of the mortgage refinance application. Lenders have what are called overlays for conforming mortgages which are additional guidelines on top of those issued by Fannie Mae and Freddie Mac. These are called the matrix in the lending world and differ from lender to lender. Each mortgage is approved or denied according to the matrix for that particular mortgage product. For this reason, when a borrower is denied by a lender, it should not be their final attempt. However, running from lender to lender is also not a good idea since each one will probably make a hit to the credit report which can ultimately damage the borrower’s credit scores. By inquiring for information online without using a social security number, the borrower may be able to find a lender who is able to help them. It is a much easier and efficient way of searching for help and more likely that the borrower will find success.

In some cases, it may very well be impossible at this time to refinance. Finding out the reason is important because it could be related to something on the credit report which the borrower can work on improving so that in several months they may be able to apply again for a mortgage refinance after receiving a denial. Whatever the reason is for being turned down, success is still a real possibility. surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.

The Home Affordable Refinance Program (HARP): What You Need to Know, by Hayley Tsukayama, Washington Post

On Monday, the federal government announced that it would revise the Home Affordable Refinance Program (HARP), implementing changes that The Washington Post’s Zachary A. Goldfarb reported would “allow many more struggling borrowers to refinance their mortgages at today’s ultra-low rates, reducing monthly payments for some homeowners and potentially providing a modest boost to the economy.”

The HARP program, which was rolled out in 2009, is designed to help. Those who are “underwater” on their homes and owe more than the homes are worth. So far, The Post reported, it has reached less than one-tenth of the 5 million borrowers it was designed to help. Here’s a quick breakdown of what you need to know about the changes.

What was announced? The enhancements will allow some homeowners who are not currently eligible to refinance to do so under HARP. The changes cut fees for borrowers who want to refinance into short-term mortgages and some other borrowers. They also eliminate a cap that prevented “underwater” borrowers who owe more than 125 percent of what their property is worth from accessing the program.

Am I eligible? To be eligible, you must have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, sold to those agencies on or before May 31, 2009. The current loan-to-value ratio on the mortgage must be greater than 80 percent. Having a mortgage that was previously refinanced under the program disqualifies you from the program. Borrowers cannot not have missed any mortgage payments in the past six months and cannot have had more than one missed payment in the past 12 months.

How do I take advantage of HARP?According to the Federal Housing Finance Agency, the first step borrowers should take is to see whether their mortgages are owned by Fannie Mae or Freddie Mac. If so, borrowers should contact lenders that offer HARP refinances.

When do the changes go into effect?The FHFA is expected to publish final changes in November. According to a fact sheet on the program, the timing will vary by lender.

What the heck does “loan-to-value” mean?

There are lots of terms we use in the mortgage industry that aren’t part of everyday parlance. Today, I’ll talk a little bit about “loan-to-value”, or LTV for short.

In fact, I have a video that’s less than 90 seconds long if you’re in a hurry:


So, just to recap what I said in the video, your loan-to-value is the percentage of your home’s value that you finance with your home loan.

Whether you a purchasing a home, or refinancing your existing mortgage, LTV is an extremely important factor in making an educated decision about your home loan.

I’ll give you an example:

FHA – When purchasing a home using an FHA home loan, you can finance up to 96.5% of the appraised value of the property. If you are refinancing, you have two options: “rate & term” or “cash-out”. Rate & term means you are refinancing to lower your rate or change the length of your loan. A rate & term refinance is capped at a 97.75% LTV for FHA. Cash-out FHA refinances are limited to 85 per cent of the value of your home. If your current mortgage is an FHA loan, you can refinance with an FHA streamline, which does not have an LTV limitation.

So your needs define your loan-to-value, which helps define what home loan program you are going to apply for.

If you would like to learn more about loan-to-value, other mortgage terminology, or home loans in Oregon and Washington, I invite you to visit my site or contact me. I am long on answers and short on sales pitches 🙂

Thanks for taking a minute to read this post!

Picture: Jason HillardJason Hillard –

Mortgage Advisor in Oregon and Washington MLO#119032

Pinnacle Mortgage Bankers

a div of Pinnacle Capital Mortgage Corp


1706 D St Vancouver, WA 98663

NMLS 81395 WA CL-81395

Equal Housing Lender

Refinancing your Underwater Fannie Mae home loan

The Fannie Mae DU Refi Plus home loan program is extended through this year and into 2012. This program may be able to help you refinance if you owe more than your home is worth. Check out this quick video:

The Fannie Mae DU Refi Plus – Basics

First of all, you need to make sure that your current loan is owned by Fannie Mae. You can check that at Fannie Mae’s website. All you need is your full address.

You also need to be on time with your mortgage payments. If you are behind in your mortgage, you will need to discuss loan modification or other options with your lender.

The biggest impediment when discussing the DU Refi Plus program is the issue of mortgage insurance. The best case scenario is if you do not have mortgage insurance on your current home loan.

If you need to figure out your options when it comes to refinancing your home in Oregon or Washington, shoot me an email. You may not always like the answer, but knowing is better than the alternative.

Thanks for taking a minute to check this post out!


Picture: Jason HillardJason Hillard –

Mortgage Advisor in Oregon and Washington MLO#119032

Pinnacle Mortgage Bankers

a div of Pinnacle Capital Mortgage Corp


1706 D St Vancouver, WA 98663

NMLS 81395 WA CL-81395

Equal Housing Lender

U.S. may require more mortgage insurance Obama, FHFA outline possible help for underwater borrowers, by Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — The regulator for Fannie Mae and Freddie Mac on Monday said the agency may force more borrowers to obtain private mortgage insurance as he also laid out further details about ideas he is considering to expand an Obama administration mortgage refinance program.

At issue is the extent to which Freddie and Fannie require private mortgage insurance for loans the firms guarantee. The two companies, which were seized by the government during the height of the financial crisis, typically require borrowers to obtain some form of private mortgage insurance if they make downpayments that are less than 20% of the value of the home they are buying.

For example, a borrower that makes a $10,000 downpayment — 5% down on a $200,000 home — must currently obtain mortgage insurance, while a borrower who puts $40,000 down on the same house doesn’t.

Federal Housing Finance Agency acting chief Edward DeMarco said in a speech at the American Mortgage Conference in Raleigh, N.C. that the agency will be considering a number of alternatives, such as hiking private mortgage insurance,to limit costs to taxpayers from Fannie and Freddie. Already the two firms have cost taxpayers some $130 billion.

DeMarco’s comments come as President Barack Obama discussed limiting costs to taxpayers from Fannie and Freddie as part of a broader deficit reduction plan released Monday. In his plan, Obama reiterated the government’s goal of gradually hiking the fees that Fannie and Freddie charge for guaranteeing home loans sold to investors. Obama said that this fee hike will help reimburse taxpayers for their assistance. The goal is also to drive investors to once again buy private-label residential mortgage-backed securities.

In his speech, DeMarco said the guarantee fee hike “will not happen immediately but should be expected in 2012, with some prior announcement.”

In addition, DeMarco discussed ways the agency could expand an expand an existing program that seeks to refinance mortgages. Obama also outlined the White House effort in this area as part of his deficit reduction proposal, following up on comments he made on Sept. 8 as part of a broader speech on the economy and jobs. Read about Obama’s deficit reduction plan

At issue is the White House’s Home Affordable Refinance Program, or HARP, which seeks to provide refinancing options to millions of underwater borrowers who have no equity in their homes as long as their mortgage is backed by Fannie and Freddie. The program has only helped roughly 838,000 borrowers as of June 30, with millions more underwater.

DeMarco said the agency is considering a number of options to encourage more borrower and lender participation, including the possibility of limiting or eliminating risk fees that Fannie and Freddie charge on HARP refinancings.

These fees are also known as “loan level price adjustments” and have been charged to offset losses Fannie and Freddie accumulate in cases when HARP loans go into default. The fees are typically passed on to borrowers in the form of slightly higher interest rates on their loans.

“Loan level price adjustments, representations and warranties… and portability of mortgage insurance coverage are among the matters being considered,” he said.

By saying the agency is consider “representation and warranties,” DeMarco indicated that the agency could seek to try and encourage more lender participation in HARP by offering to indemnify or limit banks’ “reps and warranties” risk when it comes to loans refinanced in the program.

Also known as put-back risk, in this context, is the possibility that the loan originator will have to repurchase the loan from Fannie and Freddie because the underwriting violated the two mortgage giants’ guidelines.

Observers contend that this kind of “put-back” relief would encourage lenders to invest in more underwater refinancings but critics argue that it also have the potential to pile up losses on Fannie and Freddie and taxpayers.

DeMarco also said the agency is looking at whether they can allow the borrower refinancing their loan to keep the same private mortgage insurance they had before the re-fi. Currently, the borrower must obtain new private mortgage insurance when they refinance the loan, at an additional cost.

DeMarco said the agency is also considering allowing for even more heavily underwater borrowers, those not currently eligible for the program, to participate. As it stands now, HARP only allows borrowers to refinance at current low interest rates into a mortgage that is at most 25% more than their home’s current value. The FHFA said Sept. 9 that it was considering such a move. However, DeMarco said there were several challenges with such an expansion and that the outcome of this review is “uncertain.” Read about how a quarter of U.S. mortgages could get help

A J.P. Morgan report Monday predicted the FHFA’s first focus to expand HARP will be to assist this class of super-underwater borrowers.

“Given this focus on high [loan-to-value] borrowers, we believe the first wave of changes will include lifting the 125 LTV limit,” the report said.


Report Reveals Racial Disparities in Mortgage Lending, Posted in Financial News, Mortgage Rates, Refinance

Funds used for refinancing home mortgages were less available in the minority sections of major U.S. cities than in predominantly white areas after the recent housing crash, according to a new study released on Thursday. The study, compiled by a coalition of nonprofit groups across the country, revealed that refinancing in minority areas has decreased since the recession.

Mortgage Refinancing Drops 17 Percent in Minority Areas

The report, titled “Paying More for the American Dream V,” took a look at seven metropolitan areas–Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, N.Y.–to explore conventional mortgage refinancing.

The study, compiled by groups like California Reinvestment, the Woodstock Institute in Chicago and the Ohio Fair Lending Coalition, revealed the following:

  • Refinancing in minority areas decreased by an average of 17 percent in 2009 compared with the year prior.
  • Refinancing in white areas jumped by 129 percent.
  • Lenders “were more than twice as likely” to deny applications for refinancing by borrowers living in minority communities than in majority white neighborhoods.

The report also found that minority borrowers were more likely to obtain a high-risk subprime mortgage loan than white borrowers, even if their credit was good.

Lenders Urged to Invest More in Low-Income Communities

Because of the inconsistency the study’s authors found in lending practices, they are concerned that there are ongoing racial disparities in mortgage lending as a whole.

Adam Rust, Director of Research at the Community Reinvestment Association of North Carolina, noted in statement “Lenders are loosening up credit in predominantly white neighborhoods, while continuing to deprive communities of color of vital refinancing needed to aid in their economic recovery.”

To aid the issue, the authors are urging lenders to make changes, including:

  • Investing more in low-income communities
  • Improving disclosure requirements to protect unwary borrowers

They noted that it is subprime loans that contributed largely to the housing market crash because not only were they given to those with poor credit, but income was never checked to confirm that borrowers could repay the balance.

With foreclosures expected to flow heavily in the months to come and home sales still struggling, the authors believe that expanding fair lending opportunities to all who qualify could help repair the housing industry. It’s for this reason they think changes to lending practices should be a top priority for financial institutions.

Mortgage Apps Rise as FHA Loan Demand Surges,

Mortgage application volume increased 5.3 percent on a seasonally adjusted basis during the week ending April 15 as government mortgage demand surged, the Mortgage Bankers Association reported today.

The refinance index increased a meager 2.7 percent from the previous week, but purchase money mortgages jumped 10.0 percent, mostly due to a 17.6 percent spike in FHA loan lending.

“Purchase application volume jumped last week largely due to another sharp increase in applications for government loans. Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week.”

That pushed the refinance share of mortgage activity to 58.5 percent of total applications from 60.3 percent a week earlier.

So it looks as if purchases will eclipse refinances in the near future, which is good news for the flagging housing market.

Meanwhile, the popular 30-year fixed-rate mortgage dipped to 4.83 percent from 4.98 percent, keeping the hope of refinancing alive for more borrowers.

The 15-year fixed averaged 4.07 percent, down from 4.17 percent a week earlier, meaning mortgage rates are still very, very low historically.

That alone could bring more buyers to the signing table this summer.

SBA opens 504 refinancing to more firms, by Kent Hoover, Portland Business Journal

The U.S. Small Business Administration will allow more businesses to refinance their commercial real mortgages through its 504 loan program.

The SBA initially restricted this new refinancing option to small businesses that faced balloon payments on their mortgages before Dec. 31, 2012. Beginning April 6, it will open the 504 refinancing option to businesses with balloon payments due after that date.

“With the collapse of the real estate bubble, many small business owners have found themselves unable to refinance as a result of inflated real estate values at the time they took out their mortgage,” SBA Administrator Karen Mills said. “SBA’s temporary 504 refinancing program was first made available to those small businesses with the most immediate need. Today’s step opens this critical assistance to more small businesses, giving them the opportunity to restructure their debt and free up capital that will be essential to keeping their doors open and also their future ability to grow and create jobs.”

The Small Business Jobs Act, which was enacted last September, allowed the 504 program to be used to refinance existing loans on owner-occupied commercial real estate through September 2012. To be eligible for refinancing, the mortgage must be at least two years old, and the business must be current on their payments for the past 12 months. Borrowers can refinance up to 90 percent of the current appraised property value or 100 percent of the outstanding mortgage, whichever is lower.

The SBA’s 504 loans are used to finance fixed assets, primarily real estate. Typically, a 504 project includes a first mortgage from a private-second lender that covers 50 percent of the cost, an SBA-guaranteed second mortgage from a certified development company that covers 40 percent of the cost, and 10 percent equity from the small business borrower.

Read more: SBA opens 504 refinancing to more firms | Portland Business Journal

Mortgage Applications in U.S. Increase From 12-Month Low on Refinancing, by Bob Willis,

Mortgage applications in the U.S. rose last week from a 12-month low as refinancing increased for the first time since early November.

The Mortgage Bankers Association’s index of loan applications increased 2.3 percent after dropping 3.9 percent in the prior week to the lowest level since December 2009. The group’s refinancing gauge rose from the lowest level since Jan. 1, while the purchase index declined.

Home-purchase applications fell 31 percent at the end of the year from a 2010 high in April, while an increase in mortgage rates hampers refinancing. Declining home prices, mounting foreclosures and unemployment hovering near 10 percent mean any recovery in housing, the industry that triggered the recession, will probably take years.

“It doesn’t look good,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “With rates moving up, it’s going to be a tough hurdle.” On purchases, “we’re still in this sideways, choppy situation.”

The group’s refinancing gauge rose 3.9 percent after dropping 7.2 percent. The purchase index fell 0.8 percent last week after rising 3.1 percent.

The average rate on a 30-year fixed loan dropped to 4.82 percent last week from 4.93 percent the prior week, which was the highest since May, the group said. The rate reached 4.21 percent in October, the lowest since the group’s records began in 1990.

Borrowing Costs

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $525.87, or about $22 less than the same week the prior year.

The share of applicants seeking to refinance a loan rose to 71 percent last week from 70.3 percent the prior week.

Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, on Dec. 22 reported a fourth-quarter loss bigger than analysts expected as revenue fell 19 percent.

“The year can generally be described as one where we and the industry were bouncing along the bottom,” Chief Executive Officer Ara Hovnanian said on a conference call.

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

To contact the reporter on this story: Bob Willis in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

Ginnie Mae Gives FHA Short Refis The Green Light,

Ginnie Mae has announced that it will allow issuers to pool Federal Housing Administration (FHA) short-refinance loans in Ginnie Mae single-family fixed-rate or adjustable-rate mortgage pools.

The loans must meet the criteria for certain FHA Automated Data Processing codes, which Ginnie Mae outlines in its Nov. 8 memorandum.

The short-refi program, which the FHA rolled out in September, is aimed at borrowers who are underwater but current on their mortgages. To Vicki Bott, the FHA’s director of single-family programs, the short refi’s ability to be sold into a typical Ginnie Mae pool represents one of the program’s improvements over the agency’s previous efforts to help borrowers regain equity in their homes, such as Hope for Homeowners.

“We do believe a short-refi is more simplistic and from a secondary market standpoint,” Bott told Servicing Management. “They’re TBA-eligible, and so the pricing to the consumer should be lower.”

Ways to Stop Foreclosure Immediately Yes, it is Possible, by

Foreclosure auction 2007

Image via Wikipedia

If you are facing foreclosure, all hope is not lost. There are ways to stop foreclosure immediately and you may have more power than you think. If you have fallen behind on mortgage payments and think you are – or know you are facing foreclosure due to a notice from your lender. Take action now.

It is actually more expensive for a lender to foreclose on a home than it is to work with a distressed borrower. The moment you realize you will have trouble making an on-time payment, contact your loan officer and explain your situation. You’ll be amazed at the willingness of many mortgage lenders to offer extensions and foreclosure alternatives to borrowers who make an honest and sincere effort to communicate and cooperate with a lending institution.

Explore your refinancing opportunities. Despite a sluggish economy, there are still many lenders out there who are willing to refinance home loans. Depending on your credit rating, home equity and ability to repay, you may find the right lender to offer a creative loan package that could actually lower your payments or allow you to miss a payment in the refinance process. If you think you may be in trouble, seek a refinance opportunity before late payments drag your credit rating down.

A qualified representative can work with your bank to negotiate a settlement. In many cases, mortgage lenders will accept less than is actually owed on a home to avoid the expensive process of foreclosure. In the end, a short sale could have less negative impact on your credit rating than a foreclosure.

By the way, by researching and comparing the best stop foreclosures services in the market, you will be able to determine the one that meet your specific financial situation, plus the cheaper and quicker options. However, it is advisable going with a trusted and reputable stop foreclosure specialist before making any decision, this way you will save time through specialized advise coming from a seasoned advisor and money by getting better results in a shorter span of time.

Hector Milla runs the Stop Foreclosure Loans Help website, where you can get immediate assistance from professionals serving your state. We have done all the hard work for you and selected the best 3 rated stop foreclosure services.

Home Purchase Loan Applications Highest Since May,

It was a good week for home purchase applications as refinance apps fell for a fifth straight week, according to the Mortgage Bankers Association.

Overall, mortgage application volume decreased 0.2 percent on a seasonally adjusted basis for the week ending October 1.

The refinance index slipped 2.5 percent from the previous week and the seasonally adjusted purchase index jumped 9.3 percent to the highest level since the week ending May 7.

The unadjusted purchase index was up 9.1 percent compared with the previous week, but still 34.7 percent lower than the same week a year ago.

“The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent,” said Jay Brinkmann, MBA’s Chief Economist, in a release.

“This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program.

Brinkmann noted that FHA loan apps may have jumped as borrowers rushed to get applications in before the new FHA requirements took effect on October 4th, which include higher credit score and down payment requirements.

The increase in purchase activity pushed the refinance share of mortgage activity to 78.9 percent of total applications from 80.7 percent the previous week.

Mortgage Rates Hit New Record Lows

Meanwhile, the popular 30-year fixed-rate mortgage hit a new record low 4.25 percent, down from 4.38 percent a week earlier.

The 15-year fixed also hit a record low, falling to 3.73 percent from 3.77 percent.

Finally, the one-year adjustable-rate mortgage increased to 7.11 percent from 7.04 percent.

The mortgage rates are good for mortgages at 80 percent loan-to-value – pricing adjustmentscan lower or raise your actual interest rate.

Keep in mind the MBA’s weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or rejected apps, which have surely increased since the mortgage crisis got underway a few years back.

Let’s Use Fannie And Freddie To Bail Ourselves Out By Refinancing Everyone’s Mortgage — Says Glenn Hubbard, by Daniel Gross, Yahoo!

Glenn Hubbard, Harvard-trained economist, former Bush administration official, dean of the Columbia Business School, is a mild-mannered, buttoned-down guy. But his proposal to bolster the housing market and provide some stimulus to America’s long-suffering homeowners is a bit radical.

In a recent New York Times op-ed article, Hubbard and Columbia Business senior vice dean Chris Mayer urged a simple solution: Fannie Mae and Freddie Mac, the government-controlled housing giants, should just refinance homowners at today’s low interest rates.

Hubbard joined Aaron and me to discuss this proposal, as well as other prescriptions he lays out for reforming America’s housing finance

system in his new book, Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity, co-authored with Peter Navarro.

Hubbard noted that the government and the Federal Reserve have already made significant efforts to shore up housing. “The Fed’s purchase of mortgage-backed securities really helped the housing market a lot,” by helping to narrow the spread between Treasuries and mortgages, Hubbard said. But falling house prices have made it difficult for people with under water mortgages to take advantage of lower rates. “Even with low interest rates, it’s hard to see a lot of refinancings because loan to value ratios are high,” he says.

A Sensible, Low-Cost Solution

His suggestion is that Fannie and Freddie could simply refinance existing mortgages at lower rates, at no additional cost to taxpayers. With Fannie Mae and Freddie Mac under U.S. conservatorship, the taxpayers already guarantee most mortgages through them. Hubbard believes this refi boom would ultimately save taxpayers money, since borrowers would be more likely to stay current on new mortgages with lower interest rates.

“More to the point for stimulus, this would be the equivalent of a $50 billion to $60 billion per year long-term tax cut for middle-income families, with no cost to the Treasury,” he says. “It seems pretty sensible.”

A bonus: this plan wouldn’t require passing legislation through a gridlocked Congress.

Of course, there are obstacles. Even at today’s much lower volumes, the home-lending system is having difficulty processing mortgage documents efficiently. Many critics are calling for Fannie and Freddie to reduce their scope of activities, not to increase them. And then there’s the question of moral hazard: Wouldn’t this just be another example of taxpayers bailing out borrowers who made what turned out to be poor decisions?

Not so much, says Hubbard. Many of the borrowers who now have loan-to-value (LTV) ratios that preclude them from refinancing are in the situation not because they borrowed so much to buy a home, but because the property supporting the mortgage has declined in value by 30 percent. “The whole thrust is to keep people in their homes and provide a tax cut that they would have gotten if their LTVs weren’t so high,” said Hubbard.

More Housing Solutions

In Seeds of Destruction, Hubbard and co-author Peter Navarro offer some other provocative thoughts on how to reform housing finance and avoid another debacle. Among the suggestions:

  • Both homeowners and lenders should be required to have some “skin in the game” on mortgages.
  • Prohibitions or restrictions on funky lending practices such as interest-only and adjustable-rate products, especially if they’re going to be securitized.
  • Greater disclosure on the information that goes into creating credit ratings for mortgage-backed products.

Perhaps most controversially, Hubbard calls for a rethinking of the home mortgage deduction, which allows homeowners to deduct interest on loans up to $1 million from their taxable income. The home mortgage deduction is an inefficient and expensive means of subsidizing housing and benefits higher-income Americans disproportionately.

“I’m not saying repeal it this afternoon, but we should take a hard look at our subsidies for housing and ask if they really make sense,” he tells Aaron and me in the accompanying clip.

If there’s a need to subsidize homeownership for lower and middle-income Americans, policy should focus subsdies on those sectors, Hubbard says. “But the very expensive subsidy system we have now really helped get us in trouble.”

Mortgage Refinance: Proposed Home Refinance Bill Could Allow Almost Everyone to Refinance, by Rosemary Rugnetta,

( – Although the current low mortgage interest rates have helped numerous homeowners torefinance into better terms, many have not be able to take advantage of these deals. Tighter lending guidelines have left many homeowners with no where to turn for help. In an effort to help save homeownership for many Americans, Representative Dennis Cardoza of California has proposed a home refinance bill that could allow almost everyone to refinance.

H.R. 6218 is called The Housing Opportunity and Mortgage Equity Act of 2010 (HOME). It is designed to offer refinances directly to homeowners who need help. As other foreclosure prevention programs have failed to prevent further defaults, this bill can possibly reduce foreclosures drastically and reward those who have continued to make their monthly mortgage payments even through economic struggles. With reduced mortgage payments, consumers will have more available cash to spend each month thus stimulating a dragging economy. In addition, this type of refinance can help eliminate strategic defaults and loan modifications.

Following are some of the details of the bill:

-A qualified mortgage is one that is current or in default as long as it is the borrower’s primary residence and is owned or guaranteed by Fannie Mae or Freddie Mac, This residence can be a single family dwelling, one to four family dwelling, condominium or a share in a cooperative ownership housing association.

-Any penalties for prepayment or refinancing and penalties due to default or delinquency would be waived or forgiven.

-The term of the new refinance could be no longer than 40 years.

-The servicer cannot charge the borrower any fees for refinancing.

-Fees for title insurance coverage will be reasonable in comparison with fees for the same coverage available. Any fees associated with the refinance would be rolled into the mortgage.

-The enterprise (Fannie Mae and Freddie Mac) will pay the servicer a fee not to exceed $1,000 for each qualified mortgage that is refinanced.

-There will be no appraisal required.

-In order to pay for this, the old mortgages will be paid off when refinanced. The new refinances will be funded by selling new mortgage securities.

Although lenders believe that they will lose too much money if this bill is adopted, it can probably be the best solution given to date to halt the endless foreclosure issue. It will be interesting to see how this bill develops, what will be added and what will be taken away or even if it will pass. According to Congressman Cardoza’s website, there are about 30 million mortgages guaranteed by Fannie Mae and Freddie Mac. The savings from this program could be tremendous and have been estimated by Morgan Stanley and JP Morgan Chase to be an annual reduction of approximately $50 billion in mortgage payments. While the success of the available current programs is still questionable, this proposed bill which allows almost everyone to refinance could be the answer to accelerating the economy.

The Art of the ReFi, by Jason Hillard, Home Loan Ninjas Blog

I was asked by Portland Realtor Fred Stewart recently if I wanted to write an article on refinancing for his blog, Oregon Real Estate Round Table. This became a challenge that I was not expecting.

I set out to see what the competition is “blogging” about the topic of refinancing. What I found is more of the same: advertisements disguising themselves as blog posts. I guess I should keep in mind that my blood pressure usually skyrockets when I read other mortgage blogs.

So let me walk you through how/why to refinance in the current mortgage environment. The first step is admission, and is perhaps the hardest thing to come to grips with:

You do not own your home.

If you have a home loan, then the bank owns your home. You own the equity. You may not have equity. You may just own a mortgage. This idea may sound counter-intuitive, but once you accept it and move on, your view on refinancing may change. You should now be thinking, “how can I leverage the portion of my home’s worth that I actually own?”

If you’re still having trouble, consider this. You are thinking about your “home”. I am talking about your “house”, and the debt instrument against it, which is owned by a bank. Separate your emotions from this exercise.

Now, I am a firm believer in the concept of Mortgage Planning, which has at its core a very simple concept:

Untapped equity does you no good.

Let me give you an example. If you own $60,000 in home equity, well then let’s start by saying that you are in much better shape than most. However, if you choose to leave that equity in the “untapped ether”, it is nothing more than the theoretical result of a process that you may or may not engage in. In other words, if you are not selling your home in the next 3 years, who cares how much equity you have? Who knows what your home will be worth in 3 years?

Now let’s take it one step further: what if you lose your job? What if you could really use that $60,000 while you look for a new job? Well, good luck qualifying for a refinance without any income. It won’t happen. So, having $60,000 in untapped equity, which is the percentage of the house you ACTUALLY own, is completely useless. Had you taken that equity out when it was readily available, you would have a $60,000 slush fund for a rainy day.

This method of managing equity requires restraint and discipline, but you can see that it illustrates the outdated concept of homeownership. We are all for people “owning” homes, but you have to understand that while you may be a home “owner”, the bank actually owns the lion’s share of the four walls that comprise your house.

So, when I hear some mortgage agent saying “rates are at historic lows” and “now is a great opportunity”, my stomach does a backflip. We agree, rates are low. But that is an awfully generic statement. And yes, now is a great opportunity, but for who? The fact is that when it comes to refinancing, the circumstances which need to be considered are highly individualized. What if you can’t get the “lowest rate” because of credit score?

Well, maybe you shouldn’t be so hung up on the rate.

Well, now what in the world would I say that for? Let’s break it down. Say you have a rate of 5.5% on your current mortgage and $40,000 in equity available (“equity available” in this case refers to the portion of your equity which you could actually pull out by refinancing, not the total amount of equity). You also happen to have about $800 a month in credit card payments.

You call up a mortgage professional to inquire about a refinance. Your credit score and LTV (loan-to-value) conspire against you though. The rate you would qualify for is less than .375 lower than your current rate. You ask yourself, “why would I pay $6000 in closing costs for what is essentially the same rate I have now?”

The answer is that by doing so, you have leveraged your available equity to save something like $600 a month on your total monthly “out-go”. This is the equivalent of getting a $600/mo raise in your salary. Also, you have transferred all of the interest from your credit cards to your mortgage, which is tax deductible. This saves you more money. The lesson: don’t get so hung up on the rate. Focus on the outcome.

Time for disclosure: I have avoided using “exact numbers” and precise monthly payments because that requires all kinds of math and figures, which people hate reading and would only serve to muddy the point. You can get exact numbers for your situation by contacting us, or any other mortgage professional.

Let’s review one more situation; one which is much more common for the current market. You have a pretty good rate from a couple years ago, but don’t want to miss out on this “historic opportunity” because it’s all you have heard on the radio for the last 2 years. Of course, since your last refinance was a couple of years ago, you probably don’t have a lot of available equity. So you aren’t looking for any cash out, just a simple rate & term refinance.

Let’s say that your loan amount is such that lowering your rate about .75% on a new refinance only saves you about $120 a month. The old school mentality says “why pay $6275 in closing costs to only save $120 a month?”

After all, that would mean that it would take 52.29 months to pay off your refinancing costs. ($6275/$120 = 52.29)

You’re probably thinking you are losing $6275 in future earnings, which seems like a lot to trade for $120 a month now. However, what if you don’t sell your home? What if the value drops further, and that $6275 isn’t there in the future? What if your salary gets cut at your job? The $6275 is theoretical. The $120 a month savings is tangible. You need to frame the question this way:

Which is more valuable to me? The tangible savings now, or the possibility of return in the future?

We are not recommending you tap yourself out just to save a few bucks every month. That’s the point. The answer to this question should be as unique as the person asking it.

However, you do need to start thinking about your mortgage in this way. It’s a brave new world, and it is likely here to stay.