Affordable Refinance & Modification

Good Afternoon Folks,

By now we've been bombarded with speculation over the details of the PBO's Homeowner Affordability & Stability Plan. I'm sure many of you out there are wondering how to take advantage of it.

The specifics available currently can be found at the Treasury Department website. There are basically two parts to the plan.

The first is The Home Affordable Refinance. In a nutshell this is a program that is not widely available yet, but will be 4/4/2009. Through it, homeowners who owe more than 80% of what their home is currently worth will be able to refinance to lower interest rates with no Private Mortgage Insurance. It will also allow homeowners to refinance from ARMs to Fixed-Rate loans.

The caveat is that your loan must be owned by one of the Government Sponsored Entities (GSE); Fannie Mae or Freddie Mac. You will also need to be current on the mortgage with a good payment history.

To find out if your loan is owned by Fannie Mae click here.
To find out if your loan is owned by Freddie Mac call 1-800-FREDDIE.

The second part the of the plan is The Home Affordable Modification. The specifics of the modification are a bit murkier in that not every loan servicer, lender or bank is required to take part. It seems that it will be required that any entity using TARP or TALF funds will have to though. The place to begin for those homeowners in trouble and at risk of foreclosure is to contact your servicer. You should also contact a HUD Housing Counselor for assistance. Negotiating with mortgage servicers can be difficult and to make sure you have the best chance for a meaningful modification that will be a successful long-term solution you should enlist the advice of a counselor. In Rhode Island you can also contact Rhode Island Housing.

Now onto an update of interest rates.

Currently we're seeing rates holding steady across the board around 5.50% for Conventional and Government loans. Portfolio mortgage program rates for 30 Year Fixed loans are holding around 5.375%. The yield on 10-Year Treasuries is fluctuating between 2.85 - 2.95. As I've maintained until we see the yield drop into the mid to low 2.00 range mortgage rates won't decrease meaningfully.

- Andrew