New Refinance or Loan Modification For Underwater Homeowners

refinance mortgage ratesNew Refinance or Modification Program for mortgages NOT owned by Fannie or Freddie?  We just read this and thought it was interesting:

“Not enough can be said about the importance of silence!” But there is no silence on rumors that the Treasury Department might try to push through a new initiative, referred to as the “Market Rate Modification Program,” which will allow underwater borrowers with non-agency mortgages to refinance to today’s low interest rates.

That’s right, anyone with an Alt-A, subprime, option ARM, jumbo, etc., should pay attention. As one lender wrote to me, “Katy bar the door!”  This group has definitely been left out of all the fun, although the Treasury Department, and plenty of major servicers, has determined that borrowers with current LTV’s north of 125% who have such loans are more likely to default, despite being current on payments.

It is believed that what will be suggested is if a borrower is one of those “Significantly Underwater Borrowers” that is current on mortgage payments, they’ll need to do is provide a hardship affidavit with the loan application which is meant to prove a “reasonably foreseeable default” under mortgage securitization rules. And this would supposedly satisfy investors who might otherwise prefer their higher original yield.

Each month during the five years after the modification took place, the Treasury would pay loan servicers the difference in interest between the borrower’s old rate and new. After the five years are up, the Treasury would stop compensating servicers, regardless of whether said loans were above water or not, and the borrower’s interest rate would remain at the lower rate.

Thinking about a refinance, it might be time!  That’s so much better than a modification (which as you can see is just temporary).  We have several programs that will allow us to refinance folks with NO appraisal! :)  Rumors of program changes abound right now with Congress driving us closer to a Fiscal Cliff Dive!

Stay tuned!  No matter what happens – no matter what rates are – WE have the BEST Mortgage Interest Rates Today! :)   It’s going to be interesting for those of us who are Economic Junkies over the next few weeks!  Have Questions?  Call Steve and Eleanor Thorne 919 649 5058 Connect with us on Google Plus or Facebook!


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