Monday, October 17, 2011

Federal Refi Plan to Swamp Mortgage Lenders

While there are already delays in processing refinances, the Federal Government's plan to expand Home Affordable Refinancing will put upward pressure on rates and slow processing time.

According to Mortgage Daily, the Obama administration is continuing to push for expansion of refinance plans.  However, analysts raised another issue with an upcoming mass refinance plan over the weekend: payment histories.

In order to qualify for a Home Affordable Refinance you have to have a clean pay history over previous 12 months.  JPMorgan Chase analysts, say this could be a problem for the roughly one-third of borrowers, who had a least one delinquency in the past 12 months.  There has been no word on whether the government-sponsored enterprises would look past payment history to help more borrowers with the program under the new plan.

Among the changes the Obama administration is proposing are minor adjustments such as eliminating loan-level price adjustments, negative equity caps and a waiver for representation and warranty risk.  It is unlikely that liability waiver will be included. 

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