Streamlined Home Refinancing
by admin ~ August 2nd, 2010.Rob Chrisman wrote an interesting article in the Mortgage News Daily today that challenged the Federal government mortgage programs to implement a “rapid home refinance” program across the board for Fannie Mae, Freddie Mac, Ginne Mae and FHA. Home refinance appliucations have stalled in recent weeks even as mortgage interest rates break records for all-time lows. Refinance guidelines are simply too tight.
Morgan Stanley put out a research piece suggesting a “change” to mortgage refinancing requirements: “The Federal Reserve and the Obama Administration have pushed home mortgage rates to historic lows, yet many homeowners are unable to take advantage because they are blocked from refinancing. This problem could be addressed if the Government merely recognized its existing guarantee on the principal value of a large part of the mortgage market – the mortgages that are backed by Fannie, Freddie and Ginnie and acted to streamline the refinance process. There are 37 million outstanding home loan whose principal value is backed by the Federal government. When these homeowners apply for a home refinance loan, the application is subject to a standard underwriting process that involves an LTV test (requiring a property appraisal), an analysis of the borrower’s FICO score, and income verification. We estimate a potential average rate reduction of 125 bp on 50% of the outstanding volume of agency-backed home mortgages. In the aggregate, the savings amounts to $46 billion per year.”
