TEAM EMPOWERMENT MORTGAGE CHATTER: Mar. 05, 2009: The Feds, Fannie’s, and Freddie’s plans; are we almost done with subprime resets in Sacramento? Rates improve

“Because you are alive, everything is possible.”


-Thich Nhat Hanh



Seen on a bumper sticker: “Honk if you’re paying my mortgage”. Speaking of paying for someone else’s mortgage, here are the latest in loan modification guidelines released by the US Treasury: or or

program guidelines Or Bloomberg presented a good article on the plan, and you can visit


Not to be outdone, Fannie and Freddie both came out with announcements. The key points are the elimination of upfront delivery fees (which are likely to substantially increase prepayments),  it is intended to provide low-cost refinancing opportunities to responsible agency borrowers whose home prices have fallen, remove MI fees even if the LTV is as high as 105%, and eliminate post-settlement delivery fees for Freddie Mac loans.


Fannie Mae issued “Announcement 09-04”, labeled Home Affordable Refinance – New Refinance Options for Existing Fannie Mae Loans as a follow up to the Treasury Department’s creation of the Making Home Affordable program, a key component of the federal government’s Homeowner Affordability and Stability Plan (HASP). Fannie’s new Refi Plus™ options for Fannie Mae to Fannie Mae refinances “provide significantly relaxed mortgage insurance (MI) coverage requirements to assist borrowers who have experienced home price declines, offer LTVs up to 105 percent, and provide other underwriting flexibilities. The goal is to provide refinance opportunities to borrowers who have demonstrated an acceptable payment history on their mortgage, but due to a decline in home prices, have been unable to refinance to obtain a lower payment or move to a more stable product.” It is for DU product only, starting April 1. Fannie is “retiring” the Streamlined Refinance Mortgage product.


They also came out with Announcement 09-05: “Introduction of the Home Affordable Modification Program, HomeSaver Forbearance™, and New Workout Hierarchy.”

The Home Affordable Modification program, which runs through 2012, is meant to help borrowers who are in default, at risk of imminent default, or in foreclosure. They can have their loans modified to a more affordable monthly mortgage loan payment equal to a target 31 percent of their gross monthly income. “Program participation is required for all eligible Fannie Mae portfolio mortgages and MBS pool mortgages, and is optional for other qualifying mortgage loans that are not subject to Fannie Mae’s credit loss guarantee and are held by servicers in their own portfolios or are serviced by servicers for other portfolio or securitization trusts or investors.”  We also have Fannie Mae’s HomeSaver Forbearance option, which is designed “for borrowers who are not eligible to participate in a Home Affordable Modification but have the willingness and ability to make reduced monthly mortgage loan payments for a defined time period. During the forbearance period, the servicer should be working with the borrower to identify and implement a more permanent foreclosure prevention alternative.”


Freddie Mac came out with their “Relief RefinanceSM Mortgage intended to help borrowers who are making timely mortgage payments, but have been unable to refinance due to declining property values and tightening credit terms by offering expanded LTV/TLTV/HTLTV ratios, no post settlement delivery fees, except for the Market Condition delivery fee, relief from standard mortgage insurance requirements, and simplified appraisal and borrower eligibility requirements. The refinance requirements for first-lien conventional mortgages are that they currently are owned or securitized by Freddie Mac. The only post settlement delivery fee that applies to Relief Refinance Mortgages is the Market Condition delivery fee – they are waiving all other post settlement delivery fees. “Borrowers eligible for this offering must be current on their monthly mortgage payments with no 30 day or more late payments in the most recent 12 months. You may start accepting applications from borrowers who meet this and all other requirements for the offering tomorrow, March 5. Relief Refinance Mortgages are only eligible for sale through the selling system, effective for Freddie Mac settlements on or after April 1, 2009. In all cases, in order to originate a Relief Refinance Mortgage, you must be the Servicer of record for the existing mortgage and you must be able to demonstrate that Freddie Mac currently owns the mortgage being refinanced.” Check with your Freddie rep for more details.


Consolidation continues to occur in mortgage banking. The latest, for example, comes out of Minnesota with River City Mortgage & Financial acquiring American Mortgage Corp. American Mortgage, which is based in Edina , lists 15 Twin Cities branch offices on its Web site, and has originated $2.5 billion in mortgages over the past 10 years. River City has 55 branches in six states and has originated $3 billion in mortgages since it opened in 1994.


A significant new indicator hints that as Sacramento was among the nation’s first housing markets to stumble and fall, it may now be among the first to point the way out. The chief economist for the California Association of Realtors said that the subprime loan crisis that triggered the housing and economic downturn – while destroying dreams of homeownership in thousands of Sacramento-area households – has largely run its course in the region. “In Sacramento County we’re through 80 percent of the subprime resets.” California is through 67 percent of its subprime resets, the CAR report indicated, but seems to fail to mention Alt-A resets…


Ah, back to interest rates today. This morning Jobless Claims, expected to drop slightly for last week, actually did and fell by 31,000 to 639,000. That number remains near record highs, reminding us of the tough job market. The four-week moving average for new claims rose to 641,750 in the week ended Feb. 28 from 639,750 the week before. Of course tomorrow we have the Unemployment data, with the unemployment rate expected to near 8%. However, the market will take what it is given, and the yield on the 10-yr is back down to 2.88% and mortgage prices are better by about .250.

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