Mid Week Mortgage News Alert
Two weeks ago, President Obama introduce his plan to stave off foreclosures by giving incentives to banks to help homeowners that are not currently in default lower their payments and take advantage of lower rates. Today, that plan was approved and rolled out by Fannie Mae through its Home Affordable Modification Program.
Homeowners that are currently struggling to make their payments, but are not yet behind now have relief. They can refinance their home through FNMA’s Home Affordable Modification set to roll out in April. Foreclosures will be temporarily suspended while this and other options are looked into; however, if these are not viable solutions, then the foreclosure will continue.
Lenders are encourage tolower interest rates to where a homeowners monthly mortgage payment (principal, interest, taxes, and insurance) are less than 38% but greater than 31% of their monthly gross income. If a drop in interest rate is not enough to get to this limit, then a the loan term shall be increased to 40 years. If this is still not doable, then the lender canforbear principal. And should a lender choose, it can forgive principal.
Any rate changes are valid for a period of five years. After the fifth year, the rate shall increase up to 1% per year until the interest rate cap is reached. There is a whole detailed explanation on the rate cap that I will not get into at this time, but the cap is fair.
Mortgage insurance may not be required for these transactions that may now exceed 80% loan-to-value. The decision is based on the overall strength of the loan being refinanced/modified. Home values will be based on either a Automated Valuation Model (AVM) or a Broker Price Opinion (BPO). In other words, no appraisal.
Over the course of the next couple days, I will be putting more information up about this plan and program, as there is many variable surrounding it. In the meantime, feel free to click here and download the program guidelines for your own reading
For some time now, Knightlines Mortgage Services has been offering the people of Florida a convenient way to finance and re-finance their residential property.
But that isn’t the entire story - we are also doing commercial lending in all 50 states. AND - now we can offer commercial financing OUTSIDE of the country as well. Caribbean, South America, etc - just call for the details.