Help needed for those in debt Centre Daily Times
The following editorial appeared Wednesday in the Los Angeles Times.
Rock-bottom mortgage interest rates offer borrowers the opportunity to free up a significant amount of cash by refinancing their loans and lowering their monthly payments. Unfortunately, that option isn’t available to millions of borrowers because plummeting property values have left them owing more than their homes are worth, rendering them ineligible for a better loan. Others are trapped by poor credit ratings or restrictions imposed by their second mortgages.
The Obama administration, which has tried without much success to help some of these borrowers refinance, is looking for ways to enable more of them to do so. There are trade-offs, but it’s an effort worth making.
At issue are several trillion dollars’ worth of mortgages backed by Fannie Mae and Freddie Mac that charge interest well above today’s prevailing rate. Enabling these borrowers to refinance could save them hundreds of dollars a month. It also would help more of them avoid foreclosure, reducing the amount Fannie and Freddie lose to defaults.
How Much Can You Save on a Refinance?
Politicians don’t agree on much but there is a part of the new Obama administration stimulus package that has both Republicans and Democrats excited. Every American homeowner may qualify for it and most economists as well as the non-partisan Congressional Budget Office agree that not only will it not cost taxpayers anything, it may even save government sponsored companies Fannie Mae and Freddie Mac up to $100 million.
Many homeowners know the problem first hand. The housing market is in a slump. Some areas of the country have seen declines in the value of residential homes of more than 50%. Although politicians and the eternal economic optimists have said that in some areas home prices are making a rebound, in most cases, those reports are short-lived, untrue, or exaggerated. This isn’t a problem for those families who purchased at a low interest rate and don’t plan to sell their home for years or even decades but for everybody else, this has caused widespread economic disaster.
Why? Because the value of their home may be upside down meaning that they owe more on their mortgage than the actual value of the home. This makes it impossible to sell unless the homeowner is willing to sell their home and still have a mortgage payment. Second, it makes the home difficult to refinance since the value of the home is far less than the original note and even if the bank is willing to write down the mortgage, they will certainly take the opportunity to protect themselves from further value decline.
Homeowners who attempt to refinance report that banks are asking for as much as 1/3 of the value of the home as a cash down payment and without perfect credit, those nearly 4% interest rates aren’t offered. According to President Obama, for those who can qualify, they could save as much as $2,000 annually.
The New Plan
Using an existing federal refinancing initiative, the Home Affordable Refinance Program, the Federal Government will ask Fannie Mae and Freddie Mac to provide incentives for banks to refinance loans for all homeowners regardless of their credit history or home value. The program wouldn’t require large, if any money down, and it will lock in an interest rate around 4%. According to a Wall Street Journal blog, homeowners who are not up to date on their payments shouldn’t bother to apply until they are current. The program will run through 2013 so homeowners will have more than a year to catch up.
Refinance Help. Fill this form and get help!
Mortgage Information : How to Refinance a First & Second Mortgage
Refinancing a first and second mortgage together is a simple process that is quite similar to a first mortgage refinance, but the two loans are ...
refinance rates for second mortgages - News
New Mortgage Plan to Focus on Lowering Payments - Washington Post
United Press InternationalNew Mortgage Plan to Focus on Lowering Payments For instance, Congress established Hope for Homeowners late last year to help troubled homeowners refinance into new loans. But since that program was Obama To Push Housing Ideas Today In Arizona
|
|
A plan for home owners - Detroit Free Press A plan for home owners The much more widespread and economically significant housing problem is the inability to refinance above-market-rate mortgages because of declining home |
|
America's New Housing Problem: Unemployment - Forbes America's New Housing Problem: Unemployment They also wrote in defense of adjustable-rate mortgages that there is no data to support the idea that resets increase defaults. They added that mortgages |
|
(FED) Stabilizing the Housing Market: Focus on Communities - Forex Hound (FED) Stabilizing the Housing Market: Focus on Communities However, it also reflects the fact that reduced home equity and tighter mortgage credit have impaired borrowers' ability to refinance their mortgages in |
|
Homeowners' rallying cry to banks: Produce the note - Bloomington Pantagraph Homeowners' rallying cry to banks: Produce the note If people gambled by taking an adjustable rate mortgage, and then lost their gamble because the rates went up or they screwed up their finances to the point |