Sacramento Real estate investors and wannabes, industry experts and politicians throughout the region expressed relief when the Obama administration announced major changes to a federal program that could help more homeowners who are having problems on their real estate mortgage. The Obama administration believes that these changes would have a great positive effect in the industry once it is implemented.
But most of the real estate experts have agreed to remain silent not until they see that the administration would really pursue on the said program. They remain quite since lender participation in the program is voluntary and implementation could depend on the situation.
According to a real estate expert in Sacramento, “The changes will affect the Home Affordable Refinance Program, which aims to help certain borrowers refinance their home loans and reap the benefits of historically low mortgage rates.”
The program, as of August, has helped almost 5,000 people refinance their mortgages and lower their monthly payments.
The Obama administration estimates it could double that number with the new adjustments, an authorized person said.
To give you a better idea, the government’s shifts include:
Encouraging people to refinance into home loans with shorter terms by nixing certain fees.
They would also take away the 125 percent loan-to-value cap for fixed-rate home loans, something that kept many borrowers from taking advantage of the program. The Obama administration would also get rid of new appraisals and instead using what government officials call "automated valuations models."
But the question is will this work to everyone?
According to some experts, they doubted this so called refinancing. "I doubt it will have a large effect nationwide," said a director of real estate center at San Diego State University. "And the question remains as to how banks will implement."
Government enterprises Freddie Mac and Fannie Mae, who were part of Monday's announcement, will unroll more exact details on the changes by Nov. 15. Lenders are not required to take part in the program.
"Implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes," the FAQ says.
Another real estate practitioner added that the said refinancing program could help qualified borrowers lower their mortgage payments, which may bode well for the U.S. economy. But on the other hand, he continued that the changes don't address "the main problem of negative equity" and that refinancing could cost investors a huge amount of dollars.
"Investors see refinance as a prepayment creating a loss relative to what they assumed they would earn when they invested in the mortgage (i.e., their investment at 5 percent is now one at 3.5 percent," and this would be a real problem for investors who would just like to earn from investing their hard earned money through buying and selling multiple properties below market value.
Meanwhile, an analyst at Bankrate.com, called the changes "long overdue," and "better late than never" this analyst believe that this changes would benefit the real estate industry in a very positive way.
Meanwhile, according to some experts, “Bank of America will participate in the enhanced Home Affordable Refinance Program announced by the Administration in the coming days and which is expected to go into effect December 1. Since the inception of HARP in 2009, Bank of America has helped many homeowners through this program; more than any other lender. Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage. HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”
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