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Obama Mortgage Plan

October 25, 2011 by · Comments Off on Obama Mortgage Plan 

Obama Mortgage PlanObama Mortgage Plan, The new Obama administration’s plan to help the owners of “underwater” homes to refinance their mortgages at lower interest rates – announced today – is unlikely to lift the depressed housing market, but may be given a dose of stimulus the economy.

Celia Chen, an economist at Moody Analytics, says the changes could open the program to 1.6 million customers by 2013 assuming that interest rates are close to 4.25 percent next year and 4.75 percent in 2013. However, even if the program allows homeowners to refinance 1.6 million, will still be less effective than expected, says. (The Federal Housing Finance Agency, the regulator of mortgage giants Fannie Mae and Freddie Mac, pegs the number of borrowers who could benefit from expanded program for homeowners who owe more than their properties are worth less as 1 million of an estimated 4 million “under water.”) While any support is positive, the new plan “will not help the housing market largely out of its stagnation,” says Chen.

Chen says that one of the biggest factors dragging down the housing market is weak demand due to high unemployment and anemic consumer confidence. Second, there are approximately 3.8 million households in difficulty – a massive oversupply of inventory that is keeping prices down homes that have fallen almost 30 percent from its peak in 2006. The new program will not address any of the two biggest problems in the housing market, he says.

However, Janaki Rao, a mortgage strategist at Morgan Stanley, said Obama’s plan has the potential to “unlock significant economic stimulus through the house, sparking a wave of refinancing.” It is estimated that loan modifications could generate savings of annual cash flow of approximately $ 7 million, assuming that borrowers refinance with a mortgage of 4 percent. Administration officials estimate that refinancing can save an annual average of 2500 and – what amounts to a substantial tax cut.

The new initiative, which involves removing barriers to owners of qualifying for the Home Affordable Refinance Program (HARP) is the latest in a series of steps by the president to defend their mediocre mortgage relief efforts and promoting their use and economic policies. So far, the harp has helped less than 1 million borrowers refinance their homes. Hay and $ 550 million in mortgages that could benefit from the elimination of current funding constraints, says Rao.

At its core, the latest initiative would allow homeowners to refinance, regardless of how far from home has fallen in value. Is subtracted from the current ceiling of 125 percent of the current value of a loan. The FHFA is also extending the expiration date for the harp at 18 months, to December 31, 2013 for loans originally sold to Fannie Mae and Freddie Mac

The plan would also eliminate certain charges based on the risk for borrowers to refinance short-term mortgages and reduced rates of other borrowers, who have been a major deterrent for many homeowners.

Tacitly recognizing the politics of housing crisis, President Obama announced the initiative, which can be implemented without legislative action, in Nevada, the foreclosure capital of the country. About 60 percent of all homeowners with mortgages totaling more than the value of the underlying property. The median value of homes in Nevada fell 46.4 percent between 2007 and 2010, and 286,391 to 153,364 and the state and continues to lead the nation in foreclosures, with one in every 118 households receiving an enforcement notice relating to last month, according to RealtyTrac Inc. Nationwide, approximately 10.9 million, or 22.5 percent of all residential properties with a mortgage under water, according to CoreLogic, a feed California-based data.

Rep. Dennis Cardoza, D-Calif., An outspoken critic of the housing policies of the Administration, said the new plan is likely that poor performance, like the previous proposals. “I have no confidence in their ability to get this right if you are going to act the same way with up to date,” Cardoza said The Times Prosecutor. “To go to Las Vegas to increase borrowers’ hopes that something important will happen unless you have a solid proposal is really unfair in my mind. You have to remove the cancer that has caused this problem before the patient can recover. ”

Cardoza has called for the resignation of Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD), in part because he says the HARP program is too complex. The housing crisis has crushed the Central Valley region, which represents Cardoza.

When he took office, Obama pledged to boost the nation’s housing market depressed and help 9 million homeowners avoid losing their homes to foreclosures. Almost three years later, the administration has been well below that mark, and Obama has spent 2.4 million only and the 50 billion and that he promised. Previous efforts have helped only 1.7 million people.

The Administration has been criticized for not acting sooner to modify the program that the housing market struggles to stabilize. But some experts say that housing was not always obvious what the next steps. “Many of these housing initiatives lead to more uncharted territory,” said Jared Bernstein, chief economist and former policy adviser to Vice President Joe Biden. “I correct on the fly makes sense. I think it’s the right medicine for one aspect of the disease crisis in the housing market.”

The Mortgage Bankers Association welcomed the changes harp Administration but warned homeowners that changes will not take place overnight. It may take several weeks for lenders to receive specific guidance and operational details to implement the changes.

The new Obama administration’s plan to help the owners of “underwater” homes to refinance their mortgages at lower interest rates – announced today – is unlikely to lift the depressed housing market, but may be given a dose of stimulus the economy.

Celia Chen, an economist at Moody Analytics, says the changes could open the program to 1.6 million customers by 2013 assuming that interest rates are close to 4.25 percent next year and 4.75 percent in 2013. However, even if the program allows homeowners to refinance 1.6 million, will still be less effective than expected, says. (The Federal Housing Finance Agency, the regulator of mortgage giants Fannie Mae and Freddie Mac, pegs the number of borrowers who could benefit from expanded program for homeowners who owe more than their properties are worth less as 1 million of an estimated 4 million “under water.”) While any support is positive, the new plan “will not help the housing market largely out of its stagnation,” says Chen.

Chen says that one of the biggest factors dragging down the housing market is weak demand due to high unemployment and anemic consumer confidence. Second, there are approximately 3.8 million households in difficulty – a massive oversupply of inventory that is keeping prices down homes that have fallen almost 30 percent from its peak in 2006. The new program will not address any of the two biggest problems in the housing market, he says.

However, Janaki Rao, a mortgage strategist at Morgan Stanley, said Obama’s plan has the potential to “unlock significant economic stimulus through the house, sparking a wave of refinancing.” It is estimated that loan modifications could generate savings of annual cash flow of approximately $ 7 million, assuming that borrowers refinance with a mortgage of 4 percent. Administration officials estimate that refinancing can save an annual average of 2500 and – what amounts to a substantial tax cut.

The new initiative, which involves removing barriers to owners of qualifying for the Home Affordable Refinance Program (HARP) is the latest in a series of steps by the president to defend their mediocre mortgage relief efforts and promoting their use and economic policies. So far, the harp has helped less than 1 million borrowers refinance their homes. Hay and $ 550 million in mortgages that could benefit from the elimination of current funding constraints, says Rao.

At its core, the latest initiative would allow homeowners to refinance, regardless of how far from home has fallen in value. Is subtracted from the current ceiling of 125 percent of the current value of a loan. The FHFA is also extending the expiration date for the harp at 18 months, to December 31, 2013 for loans originally sold to Fannie Mae and Freddie Mac

The plan would also eliminate certain charges based on the risk for borrowers to refinance short-term mortgages and reduced rates of other borrowers, who have been a major deterrent for many homeowners.

Tacitly recognizing the politics of housing crisis, President Obama announced the initiative, which can be implemented without legislative action, in Nevada, the foreclosure capital of the country. About 60 percent of all homeowners with mortgages totaling more than the value of the underlying property. The median value of homes in Nevada fell 46.4 percent between 2007 and 2010, and 286,391 to 153,364 and the state and continues to lead the nation in foreclosures, with one in every 118 households receiving an enforcement notice relating to last month, according to RealtyTrac Inc. Nationwide, approximately 10.9 million, or 22.5 percent of all residential properties with a mortgage under water, according to CoreLogic, a feed California-based data.

Rep. Dennis Cardoza, D-Calif., An outspoken critic of the housing policies of the Administration, said the new plan is likely that poor performance, like the previous proposals. “I have no confidence in their ability to get this right if you are going to act the same way with up to date,” Cardoza said The Times Prosecutor. “To go to Las Vegas to increase borrowers’ hopes that something important will happen unless you have a solid proposal is really unfair in my mind. You have to remove the cancer that has caused this problem before the patient can recover. ”

Cardoza has called for the resignation of Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD), in part because he says the HARP program is too complex. The housing crisis has crushed the Central Valley region, which represents Cardoza.

When he took office, Obama pledged to boost the nation’s housing market depressed and help 9 million homeowners avoid losing their homes to foreclosures. Almost three years later, the administration has been well below that mark, and Obama has spent 2.4 million only and the 50 billion and that he promised. Previous efforts have helped only 1.7 million people.

The Administration has been criticized for not acting sooner to modify the program that the housing market struggles to stabilize. But some experts say that housing was not always obvious what the next steps. “Many of these housing initiatives lead to more uncharted territory,” said Jared Bernstein, chief economist and former policy adviser to Vice President Joe Biden. “I correct on the fly makes sense. I think it’s the right medicine for one aspect of the disease crisis in the housing market.”

The Mortgage Bankers Association welcomed the changes harp Administration but warned homeowners that changes will not take place overnight. It may take several weeks for lenders to receive specific guidance and operational details to implement the changes.

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