About Government Refinance and Home Purchase Programs

As has been predicted recently the FHA is poised to raise their upfront and monthly mortgage insurance fees once again starting on April 1, 2012. For FHA home purchases and for refinances from non-FHA loans into FHA loans the monthly mortgage insurance fee will go up by 10 bps (annualized) and the one-time up front mortgage insurance premium will jump from 1% of the loan amount to 1.75%.

The good news is that refinancing from one FHA loan to a better FHA loan through the FHA streamline program will reportedly not be subject to these new increased fees. That will be a major help to borrowers in FHA loans already.

If you have an FHA loan now at more than a 5% interest rate contact us in the sidebar to learn more about the FHA streamline program. With the streamline program borrowers can refinance to a much lower interest rate without having to pay the standard closing costs, get an appraisal, or even provide detailed income paperwork in most cases. The FHA’s logic is that if a borrower can avoid 30 day late payments and maintain a credit score of more than 640 at the higher interest rate, the borrower can do so even more easily at a lower interest rate. Contact us in the sidebar to learn more about this and the other available government-backed refinance programs.

In a speech given in Orlando today an official with the Federal Housing Administration indicated that the FHA is planning to increase its monthly mortgage insurance fees again. We get this from a recent HousingWire story on the topic:

The Federal Housing Administration will announce additional premium changes to its mortgage business and streamlined refinance programs in the coming days.

FHA Acting Commissioner Carol Galante said in a speech at the Mortgage Bankers Association servicing conference in Orlando, Fla., Wednesday that the changes are on their way.

As part of the payroll tax extension agreed to last fall, the FHA will raise premiums on its forward mortgages by 10 basis points and by 25 bps for jumbo loans.

If you have an FHA mortgage with an interest rate of 5% or higher contact us in the sidebar to learn more about the FHA streamline program. With rates on 30 year fixed loans sometimes as low as the high threes in recent weeks now is an excellent time to look into the FHA streamline program. The FHA streamline program lets responsible borrowers who have FHA loans now replace their current 30 year fixed FHA loan with a new 30 year fixed FHA loan at a much lower interest rate without requiring an appraisal or income verification. So with FHA streamlines it doesn’t matter how underwater the borrower is. But the monthly mortgage insurance premium already significantly increased for FHA loans last year and if it gets much higher it will be harder to streamline.

Contact us in the sidebar to learn more about this program and the other government-backed refinance programs available.

For most of last couple of weeks interest rates on government-backed mortgages were testing all time lows. Then this week there was a slew of better than expected economic news: Unemployment dipped, the economy grew, job numbers increased, and congress agreed to extend the payroll tax. While it all sounds like good news, the reality is that good economic news normally results in interest rates increasing to some degree. We have already seen a small bump up in rates over the last couple of days. It remains to be seen if rates will rise further or if new lows will be tested in the weeks to come.

What we do know is that rates are still historically low right now so if you have considered looking into a refinance contact us in the sidebar right away to learn more about the government-backed refinance programs that are available.

There was big news today that the federal government reached a settlement with five of the biggest mortgage lending banks in the U.S. — Wells Fargo, Bank of America, Citi, Chase, and GMAC. While the news sounds big, for most Americans the settlement will have little impact. First, only borrowers who have loans serviced by one of those five banks will have the possibility of feeling an impact from this settlement. Among customers of those five banks here are the impacts that could be felt over the next few years:

Borrowers who have foreclosed in the last few years — Reports are that up to 750,000 people who lost their homes will receive $2000 as part of this deal.

People who are delinquent on their mortgages — Loan modification programs with these five banks will reportedly ramp up to some degree. There are rumors that in some cases these lenders will be willing to write down principal balances by up to $20,000 but details are sketchy on this.

Underwater borrowers who don’t have Fannie/Freddie or FHA loans now — There is hope that these five lenders will come up with refinance programs for the borrowers who can’t currently take advantage of the HARP program or FHA streamline program but no concrete plans have emerged yet.

While details are hazy reports are that the five lenders have three years to implement new programs as a result of this settlement so it could be some time before any changes in programs take full effect.

The good news is that most borrowers in the U.S. have loans that are currently backed by Fannie, Freddie, FHA, or the VA. For this majority of borrowers there are already solid government-backed refinance programs up and running. Contact us in the sidebar to learn more.

In an address in Fall Church, VA this morning President Obama fleshed out some of his new plan to help more Americans take advantage of the record low rates we are currently experiencing. The plan reportedly will lean heavily on the FHA and is designed to reduce barriers for folks who are not able to take advantage of the government-backed refinance programs already in place.

The major kink in the new plan is that the Republican controlled congress must approve it and the $5-10 billion price tag that comes along with it. Odds of that happening don’t seem high.

Even so, there are several very useful government-backed refinance programs that are already up and running well, including the FHA streamline program, the HARP program, and the VA IRRRL program. Contact us in the the sidebar to learn which programs might assist your family.