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发帖数: 2053 | 1 http://money.cnn.com/2009/07/01/news/economy/Obama_refi_program
By Tami Luhby, CNNMoney.com senior writer
Last Updated: July 1, 2009: 3:06 PM ET
NEW YORK (CNNMoney.com) -- The Obama administration is widening its mortgage
refinancing program to allow more borrowers hit hard by falling home prices
to take part.
Borrowers whose loans are now worth up to 125% of their home's value are now
eligible to refinance their homes under the Obama foreclosure prevention
plan announced in February. Previously, the limit was 105%.
The move acknowledges that home prices in many areas have fallen so far that
many people were shut out of the program.
Some 67% of homeowners in Las Vegas -- one of the hardest hit areas and
where Housing Secretary Shaun Donovan announced the expansion Wednesday --
owe more than their homes are worth.
More than one in five borrowers are now underwater, with homes in parts of
California and Florida losing more than 50% of their value, according to
Zillow.com, a real estate Web site. Some 20 million people own homes worth
less than their mortgages.
"The president's Making Home Affordable plan is already helping far more
than any previous foreclosure initiative and with today's announcement we
will extend its reach still further," said Donovan.
How many more people will be drawn to the program now, however, remains a
question, especially since mortgage rates are on the rise. Administration
officials do not have an estimate.
Refinancings slow to ramp up
Some 20,000 loans have been refinanced so far, according to the Treasury
Department.
The initiative waives the requirement that homeowners have at least 20%
equity in their home, allowing them to take advantage of today's lower rates
. Homeowners must still meet other criteria, including being current on
their payments and having loans that are owned or backed by Fannie Mae or
Freddie Mac. The administration has set up a Web site, www.
makinghomeaffordable.gov, with more information.
Wednesday's expansion means those with homes worth $200,000 and mortgages as
large as $250,000 can still qualify. Previously, these borrowers could not
have loans exceeding $210,000.
The program, however, has been slow to ramp up. Borrowers have complained
that banks are not approving their applications. The Mortgage Bankers
Association last week slashed its 2009 forecast of originations because
fewer refinancings were being done than they originally expected. The group
said only 13,000 were done in the three months after the plan's launch.
The administration has projected that 4 million to 5 million mortgage
borrowers would be helped. A Treasury official Tuesday said that the figure
applied to those who would be eligible, not necessarily those who would
participate.
Administration officials do not have an updated figure of how many people
would be eligible or participate now that the criteria has been widened.
The recent uptick in mortgage prices has blunted the plan's benefit, as well
. The Federal Reserve has been buying mortgage-backed securities and long-
term Treasurys in an effort to lower rates.
It worked for a while. Rates hit a low of 4.84% on April 28, but are now at
5.45%, according to HSH Associates.
Since mortgage rates have been in the 6% range in recent years, refinancing
to the mid-5% range may not be worth it, said Keith Gumbinger, vice
president at HSH Associates. A homeowner with a $200,000 mortgage at 6%
would see a savings of about $64 a month if he refinanced at 5.5%, and that'
s before closing costs.
"Are interest rates low enough to warrant getting into the process?" he said.
The administration's announcement comes on the same day as an industry group
reported that the demand for refinancing dropped 30% last week. In addition
to higher rates, rising unemployment is contributing to the decline.
Borrowers with Freddie Mac loans who refinance through their current
servicer can apply right away, but those who want to go through a different
lender must wait until Oct. 1. Those with Fannie Mae mortgages must use
their current lenders and wait until Sept. 1.
A second part of the program lets eligible borrowers who are in default --
or at risk -- lower their monthly payments to no more than 31% of their pre-
tax income. This can help those who are not making as much at their jobs or
who have monthly payments they can't handle. Homeowners, servicers and
mortgage investors can receive incentives to entice them to participate in
the program.
Banks have extended more than 200,000 trial modification offers, according
to the Treasury Department. Homeowners must make three monthly payments on
time before the modification is made permanent.
First Published: July 1, 2009: 12:45 PM ET |
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