Jeremy's Blog

FHA/HUD Changes

In early February Treasury Secretary Timothy Geithner & President Obama outlined a plan to help home owners looking to refinance. Before those programs even went into effect HUD (FHA) another goverment agency announced changes that WILL PREVENT millions of home owners from refinancing.

Why???? - HUD says: "Given the continued deterioration in the housing market, and FHA’s need to limit its exposure to undue risk"

Details

• Cash out refinances the maximum loan to value is changing from 95% to 85% LTV.
• 12 months seasoning now required

The Problem - When times were good homeowners all across the country took out home equity lines of credit. Many of those homeowners now would like to take advantage of the low interest rates available and roll their 1st & 2nd mortgages into one loan. However, even if they are not getting a check at closing the act of paying off a HELOC is consider "cashout" in the mortgage world. With home prices on the decline many people are going to be stuck around a 90 - 95% LTV. Come April 1st they will no longer be able to refinance and consolidate that home equity line. Please note: the "Obama Refi" does not allow "cashout" and will not help the many home owners in this situation.

Options -

• CALL ME BEFORE April 1st, 2009
• Subordinate the HELOC - IF we are able to convince the holder of that 2nd mortgage to subordinate, the transaction would not be considered "cashout" and we could go up to 98%.

My Gripe - I know many of you appreciate honesty. I wanted to throw in my 2 cents . . . . The feds roll out a program that is going to cost taxes payers millions of dollars. Ok. I can deal with that, the benefits out weigh the costs. People refinance, save $100's each month and then they go out and buy goods from local business. All and all a great boost to the economy. However, 2 weeks later the Feds announce that they are cutting back the maximum loan to value on FHA loans. The most widely used program. The changes in turn counteract all the good done over the past weeks.

Have your friends, family, & past customers call BEFORE 4/1/2009!

http://www.1stclassmortgageservice.com