By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring
On the eve of the closing for my refinancing, I notice this from the W$J:
Interest rates on fixed-rate mortgage loans for prime borrowers have
fallen to below 5%, the lowest level since the 1950s, triggering a wave
of mortgage-loan inquiries from borrowers eager to refinance. But
lenders and mortgage companies say that as many as half of the people
who want to refinance can't meet the credit hurdles and won't get
My friend and mortgage broker told me that he has been swamped with inquiries, and he seemed surprisingly grateful to get our credit scores (both around 820) and the appraisal (down only about 3% from our purchase price less than two years ago). Now I understand why:
Only about a third of U.S. mortgage debt outstanding is likely to qualify for refinancing, said Doug Duncan, chief economist of Fannie Mae. Nearly 70% of borrowers don't make the cut, he said, most often because
their credit isn't good enough or they don't have sufficient home
equity. A significant number of homeowners owe more than the current
value of their homes, a situation sometimes known as being "under
water." Others can't profitably refinance, often because they hold
jumbo mortgages, those above the $625,000 limit for loans that can be
bought or guaranteed by Fannie Mae or Freddie Mac in the highest-cost areas.
I reiterate that I am not an expert in mortgages, but I suspect a lot of people are frustrated by the incongruity of being unable to lower their monthly mortgage payments on account of the fact that they have bad credit. Wouldn't their creditworthiness improve if they got the new loan?
Short Refis coming By Alan White A big stumbling block to renegotiating mortgages in danger of foreclosure is the reality that many homeowners now owe more than their home is worth. This situation is sometimes referred to as being "underwater...
GSEs Look to Follow FHAs Lead on Streamlined Refis In a twist of fortune, it appears the GSEs are — for once — looking to follow the lead of the Federal Housing Administration, with their regulator hinting Wednesday afternoon that a plan to allow for streamlined refinancings is under consideration at both Fannie Mae (FNM: 0...
As Refis Swell, Is There Enough Warehouse Credit The volume of warehouse credit providers has fallen recently from 30 to about 10, according to an article featured last week by American Banker, raising the question as to whether there is enough warehouse capacity to handle a refinance boom that has clearly surfaced in the past week...
Cash-In Refis Grow; Lenders Taking Lumps It appears lenders may be willing to take a hit on loan modifications, according to data released late last week by Freddie Mac (FRE: 1.02 -0.97%). The GSE reported the largest cash-in share — where the refinanced loan is less than the original loan it paid off — in three years, while cash-out refinancing continued [...
Bair Broaches Another Bad Idea What are you doing here? Run over to Calculated Risk and read Tanta's fisking of FDIC Chairman Sheila Bair's most recent exercise in self-pleasuring via a demand that lenders write down the principal amount of their first lien loans to the "current value" of the property securing the loans, and why it won't work on the scale that Bair presupposes...