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Obama Going to Allow Mortgage Refinance for up to 125% LTV Archived From: Finance

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alert mods    
   posted: Jul. 1, 2009 @ 12:04p

http://www.businessinsider.com/obama-expands-homeowner-bailout-t...


   posted: Jul. 1, 2009 @ 12:04p

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.


alert mods    
   posted: Jul. 1, 2009 @ 12:16p

"Fannie, Freddie asked to relax condo loan rules: report"

"Two U.S. ... lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said."

The regulators who contributed to the mess are at it again.


alert mods    
   posted: Jul. 1, 2009 @ 12:21p

This is good news; im not looking for a write down, im paying my mortgage, just trapped at a higher rate because i couldnt refi... we will see what happens.


alert mods    
   posted: Jul. 1, 2009 @ 12:24p

Two reasons:

1. 11/2/2010
2. 11/6/2012


alert mods    
   posted: Jul. 1, 2009 @ 12:33p

Metric said:This is good news; im not looking for a write down, im paying my mortgage, just trapped at a higher rate because i couldnt refi... we will see what happens.I think it's generally a good thing, so long as it's only for refis and does not allow cash outs. It should just a be a tool to take some pressure off of homeowners in hurting markets by reducing interest rate costs.


alert mods    
   posted: Jul. 1, 2009 @ 12:40p

Yeah well while we're redistributing wealth, why not let the taxpayer shoulder more of the default risk for underwater homeowners. Maybe also allow cash out refinances so that people intending to default anyway milk the system as much as possible before walking away.

I just can't understand how propagating even riskier loans would be the solution. If people are current, why allow those 125% LTV refinances? To save them money on mortgage payments as incentive to keep paying? Hey they knew the original loan terms upon signing those mortgages. How is that gonna help bank balance sheets btw? Let me guess, they'll get an incentive too for allowing those 125% LTV refi? Stop wasting money for crying out loud. It's like a bad business model where the people never know when to fold and keep throwing good money at it hoping it'll somehow recover. It just delays the inevitable.


alert mods    
   posted: Jul. 1, 2009 @ 12:47p

How is that gonna help bank balance sheets btw? I believe these loans will be sold to F&F.


alert mods    
   posted: Jul. 1, 2009 @ 12:48p

stupid plan as usual. Might as well make it 200% to allow florida and cali to get in on the act.


alert mods    
   posted: Jul. 1, 2009 @ 12:54p

How would mortgage insurance factor in? They still have to pay until under 80%?


alert mods    
   posted: Jul. 1, 2009 @ 12:55p

nycll said:How is that gonna help bank balance sheets btw? I believe these loans will be sold to F&F.They'll make fees on making the loans.


alert mods    
   posted: Jul. 1, 2009 @ 1:01p

Yup which means they will be paying pmi for 20 years to get from 125% to 80%. They better hope for hyperinflation to boost up home pricesmcb247 said:How would mortgage insurance factor in? They still have to pay until under 80%?


alert mods    
   posted: Jul. 1, 2009 @ 1:06p

Won't matter if you've got 2 loans, the subordinate lender still won't allow more than 100-105%.


alert mods    
   posted: Jul. 1, 2009 @ 1:08p

Just another dumb example of moving private debts onto the public balance sheet. The government pumped trillions of dollars into mortgage backed securities and stimulus just so they could spin news about how "prices are dropping less quickly". All this nonsense guarantees we're not going to recover for a long, long time.


alert mods    
   posted: Jul. 1, 2009 @ 1:10p

cclyde said:nycll said:How is that gonna help bank balance sheets btw? I believe these loans will be sold to F&F.They'll make fees on making the loans.

They're basically going to convert a much riskier depreciating asset (high LTV) and take a lower rate of return for holding that mortgage.

It makes no sense from a financial perspective. But the government is involved it doesn't matter if they make foolish decisions and lose treasures of tax payer money. To get the best loan terms in this country you need to be the highest risk.

Dumb is the new smart in America.


alert mods    
   posted: Jul. 1, 2009 @ 1:33p

As many have described it, Obama's solution to the housing crisis is: more subprime loans.

Like the original subprime loans, they're really only going to work out of home prices grow rapidly over the next few years, otherwise you're looking at the perpetuation of people living underwater in their homes.

The solution to a problem caused by easy credit, is yet still more easy credit. Absolutely brilliant!


alert mods    
   posted: Jul. 1, 2009 @ 1:54p

Metric said:This is good news; im not looking for a write down, im paying my mortgage, just trapped at a higher rate because i couldnt refi... we will see what happens.

I have a friend down in Florida in the same boat as you. Actually his problem is a little more precarious because he has an ARM. He's been wanting to refi into a fixed for a while but can't because of his LTV. Hopefully this might ameliorate the situation for him.


alert mods    
   posted: Jul. 1, 2009 @ 1:57p

The problem is that people and the government feel that homes are NOT a place to live, but an Investment that will always go up in value.

How come people don't just abandon their cars? they are worth less than what we owe (they depreciate right away)? because they need something to drive. The same thinking holds true for homes - People need a place to live, and won't just walk away.


alert mods    
   posted: Jul. 1, 2009 @ 2:06p

I don't have a problem with lowering paying homeowners' monthly payments. Lenders are not short changed because prepayment risk is inherent in every mortgage loan.

This could be the perfect carrot in a "carrot and stick" solution. The real problem is that we don't have the stick side of the solution.


alert mods    
   posted: Jul. 1, 2009 @ 2:15p

brettdoyle said:cclyde said:nycll said:How is that gonna help bank balance sheets btw? I believe these loans will be sold to F&F.They'll make fees on making the loans.

It gives them a short term pump but over the long run it's very negative for banks, they will be collect interest well below inflation rates over the life of the loan.Since these are Fannie/Freddie loans, they are likely selling them off for securitization and just making servicing fees.


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