Grand Rapids Mortgage Company

The
House Financial Services Committee conducted hearings on Wednesday on
Government Barriers to the Housing Market Recovery, hearing from speakers
representing three government agencies and four representatives from the private
and quasi-private sector.

David
Stevens, Assistant Secretary for Housing and Commission of the Federal Housing
Administration (FHA) told the committee that the Obama administration feels it
is essential to facilitate the return of private capital to the mortgage
markets as the government scales back its current historically oversized
footprint.  Stevens outlined the progress
that FHA has made in restoring its capital reserves, improving loan quality,
and reducing its exposure to risk but said Congress needs to pass comprehensive
FHA reform legislation that enhances FHA’s lender enforcement capabilities and
risk management efforts.

Several others shared their perspective on attracting private investors back to the non-agency mortgage market…..

…(read more)

Effort designed to encourage principal write-downs for responsible borrowers   

WASHINGTON – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today will begin providing an additional refinancing option for underwater borrowers. Originally announced in March, this enhancement of Federal Housing Administration (FHA) refinance program will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lien holders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage. 

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – also known as being ‘underwater’ – because their local markets saw large declines in home values. As announced earlier this year, this change as well as other programs that have been put in place will help the Obama Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012. 

Participation in FHA’s short refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements. The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance. In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent and a combined loan-to-value ratio no greater than 115 percent. 

To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.For more information on FHA Short Refinance option, read FHA’s mortgagee letter

POSTED FROM HUD.GOV September 7th 2010