December 2011
Life, Health & Home
SANTA ROSA, CA. Confronted with a rising flood of foreclosed homes, property values struggled to meet the crite- ria set by conven- tional
underwrit-
ing guidelines. Property values were depreciating and lenders were scrutinizing every appraisal that came in. Home Value Code of Conduct (HVCC) was born
out of a reaction to a collapsed financial system, eliminating any communication between the broker and the appraiser. All parties involved were in the dark as to what homes were worth. This was the dawn of the dark ages of a depressed hous- ing market that gave us a new meaning to the term “under- water homeowners” who owed more on their mortgage than their homes were worth. It was only two years ago that Home Affordable Refinance Program (HARP) was born in order to help homeowners refinance out of
adjustable mortgages and
into fixed rate mortgages. HARP was intended to help
stave off the rise of defaulting mortgages and aid homeown-
ers to qualify for new fixed rate mortgages.
This was part of
the recovery. The HARP pro- gram would allow a homeowner to refi- nance their prop- erty even if they owed more than the home was worth. Homeowner’s could refinance with loan to value up to 125% and with no need for mortgage ance.
insur- Normal underwriting guidelines lim-
ited loan to value to 80% to avoid mortgage insurance. As well intentioned as this pro- gram was designed, it still left many cracks open so that many homeowners were not able to take advantage.
October 24,
2011 the Obama administration announced changes to HARP to help fill some of those gaps and reach more “underwater home- owners”.
Refinance
The Home Affordable Program
(HARP)
that was introduced in 2009 was set to expire in 2012. The new and improved, dubbed HARP 2.0, is intended to fill in the gaps that left many homeowner frus- trated and disappointed.
The new program is set to expire at
the end of 2013. The new ver- sion has eliminated many of the obstacles that kept homeowners from participating. Maximum Loan to Value. The current limit was 125% for manual underwritten loans and 105% for the automated underwritten loans known as DU Refi Plus. The new guide- lines will eliminate the loan to value cap. For Sonoma County that saw property values drop by 50% from its peak, this could allow more homeowners to take advantage of these current low interest rates that otherwise would have had to sit on the sidelines in total frustration. Capping the Risk Base Pricing
Fee. Currently Fannie Mae has Risk Base Pricing Adjustments that can add to the cost of the loan and make it uneconomi- cal to refinance. For example, currently a borrower with credit score of 650 and a loan to value of 105% would have a risk base pricing adjustment of 3.25%. These pricing adjustments have a net effect of a higher interest
rate and higher fees that make refinancing uneconomical. The new program has a cap of .75% to the fee and will eliminates these adjustments all together if you refinance into a loan term less than 30 years, like 20 years or 15 years.
Although the announcements of these changes were made in mid November, it may not be till March 2012 before most lenders will start implementing the new guidelines. In order to take advantage of this program, your loan must have been pur- chased by Fannie or Freddie prior to June 2009. You have no late payments in the last 6 months, and no more than 1 late payment in the prior 12 months. If you have already done a HARP refinance you are ineligible for a second one.
I welcome any questions or comments on this or any loan programs that are available.
barryo@stearns.com or call me at 707-291-6761
Pg 27 THE Mortgage Coach~This Month: HARP 2.0 Weird Facts & Trivia -10
Nearly half of all bills printed annually are $1 bills.
Paper money is printed on a 75 percent cotton and 25 percent fiber mix labeled "rag paper."
Long before paper currency, coin currency was acceptable tender in the U.S. While coin currency still exists in the 21st century, it is not valued as highly as coins from previous centuries minted from actual precious metal.
Pennies are made of zinc coated in copper.
Nickels are composed entirely of a copper nickel alloy.
1943 pennies were zinc coated steel to preserve copper for the war.
During World War II, nickels were not made from nickel. Despite this exception, it is the only coin to maintain the same material makeup since its creation.
Values were not engraved on coins until 1804. Prior to that year, value was determined by size of the coin.
The first person to appear on a regular U.S. coin was Abraham Lincoln.
Coins have an average lifespan of 30 years.
Happy Holidays From All Of
Us At Western Auto Body! May your holiday season be filled with food, family, friends and fun! Always remember to slow down on the roads during the rain and snow season. Try to allow a little extra time to get to your destination!
5800 Guerneville Rd Sebastopol • 829-2477
If cats could talk, they wouldn't. ~Nan Porter UPBEAT TIMES • December 2011 • 27
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