Banks Helping Homeowners more than HAMP?

In a recent report, it was discovered that banks have been doing nearly twice as many modifications as Obama’s new Home Affordable Modification Program (HAMP). That being said, it is important to take a closer look at the modifications being done. It is likely that the majority of bank modifications are not as good as the HAMP modifications which can lower the monthly payments to 31% of the pre-tax income.

Although banks have been doing more loans than the President’s HAMP program, they do give credit to the program for helping to set an industry standard for the loan modifications. That being said, one huge difference is that the banks modifications can vary widely from one person to the next and there is not very much information available about their offerings.

California Foreclosure Rates Drop

According to recent data from the Mortgage Bankers Assocation, the number of borrowers who have been delinquent on their payments has been reduced. In addition, the number of seriously delinquent loans (90+ days) also dropped from 9.54% to 9.11%. This drop was the largest the MBA has ever recorded.

At the end of 2009, California forclosures made up approximately 20% of the nations delinquencies. By the second quarter that number had dropped to 14.7%.

Another positive note for the nation was the drop in borrowers “underwater”. When a borrower is underwater, they owe more than their home is worth. This is one of the main signs that a foreclosure is imminent.

Repo Tests for Withdrawal Readiness Program

In recent news, the Federal Reserve has announced that they will be conducting a reverse repurchase agreement in order to test one of the tools for a future withdrawal of the central bank’s monetary stimulus.

Currently the series of tests do not represent a change to the monetary policy but are in fact part of the Fed’s preparation to determine readiness of their program, which will include agency mortgage backed securities for the first time.

During a reverse repurchasing agreement, the Fed will lend securities for a pre-set length of time. After the funds reach maturity they will be returned to the fed.

This possible reverse repo is just one of a number of tools that the Fed is considering using in order to withdraw some of the money that was put into the financial system to combat the recession.

US Government Role in Housing Market Wanted

A number of groups in the housing industry are strongly requesting the continued involvement of the U.S. Government in the industry. These groups want the government’s involvement because it will help keep the availability of mortgage credit high.

The relationship between the government and the groups in the industry would be one where the groups pay the government a fee in return for a guarantee on the mortgages. Also, there would have to be more oversight and transparency for housing government-sponsored enterprises. If this becomes a reality the government guarantees will need to be extremely clear in order to prevent another mortgage crisis.

Subpoenas for Private Mortgage Bonds

The Agency responsible for federal regulation of Fannie Mae and Freddie Mac has issued 64 subpoenas in an attempt to determine whether or not some of the issuers of private mortgage bonds are liable for losses taken by Freddie Mae and Freddie Mac.

The FHFA has joined this aspect of the investigation because the two financing giants have had difficulties obtaining the correct documents during their personal searches. Although the names of those being subpoenaed were not released, a number of Wall Street banks are among the biggest private mortgage bond issuers.

If the subpoenas result in liability amongst the private banks, the FHFA will use the additional funds to offset taxpayer injections.

Homebuyer Tax Credit Extension

In a move late on June 30th, the Senate decided to extend the closing deadline for the homebuyer tax credit, which was set to expire at Midnight on June 30th. The House of Representative had already signed the extension and now the document is awaiting President Obama’s signature, which is expected to come sometime next week. The document, titled the Homebuyer Assistance and Improvement Act of 2010, stipulates that any homebuyer who signed their sales contract prior to April 30, 2010 and closes before September 30th will qualify for the tax credit.

The original tax credit document was the American Recovery Reinvestment Act (signed February 2009) and gave first time homebuyers an $8,000 tax credit on their sale. Later in the year Congress decided to also enable a $6,500 tax credit for non-first time buyers.
The reason for this extension of the tax credit is that under the initial rules, many homebuyers who had signed their sales contract signed prior to April 30th were still in the process of closing as the June 30th deadline became imminent. The new September 30th deadline should allow enough time for most homebuyers to close their sales contracts and benefit from the tax credit.

Rates Lower

For the week of February 1st the 30 year fixed interest rates through Spinnaker Financial are 4.875% at 1 point origination. These rates are good for refinance loans, purchase transactions with a combined loan to value at 80% or less. There is no pre payment penalties for clients with good credit history and credible job stability.

Give us a call at 805-238-3516 or e mail us at tyson@SpinnakerFinancial.net or visit our website at www.spinnakerfinancial.net

Great time to refinance or purchase a new home. Rates are low!! 4.875 @ 1 point