WOW New Government Subprime Loan! - 09.30.10
Today's Poll: Do you think Cardoza's refi idea is good?
A. Yes. Let's do it.
B. Not sure. Maybe.
C. Oh heck no! You kidding me?
D. I'm moving to Amsterdam.
Rate this Program
Fl Mortg Lady : (October 11, 2010 4:31am)
Does anyone know of the banks/lenders that are quietly (and thankfully!) doing writedowns, a reduction in loan balance? Equity is most important to current homeowners to keep them from considering shortsale and staying in current homes.
rks: (October 10, 2010 7:42am)
Comrads, we should be grateful that the governement is willing to further socialize our democracy for us, just think, very soon we really will have the IRS super easy form. The one that has one entry: How much did you make? Send it in. The highly efficient, ethical, honest and altruistic government will then provide us with all that we need to survive. Спасибо (Spasiba) (Thank you)
barryl: (October 04, 2010 1:34pm)
DU update: release notes, subsection wtf: net tangible benefit test.
Cory: (October 04, 2010 1:27pm)
I think all no-cash-out refinances should be handled like FHA Streamlines and VA IRRRL's. If the borrower is current on their payments and refinancing the loan would have a net tangible benefit to the borrower and thus reduce the chance of a default, why not do it?
Old Appraiser: (October 01, 2010 3:52pm)
What an idea. People with a good credit rating are not getting loans. Why not do the no doc thing for a refi? I am a certified residential appraiser and would gladly see this happen, without an appraisal on the subject property, as long as the people applying have been making their payments. Jump start the economy. Oh YEA!! I've been a losn officer and think this would be the best thing since sliced bread. By the way, I am old and still believe it would work.
barryl: (October 01, 2010 9:44am)
by loosening the money supply is lowering the rates, its "elementary my friend.
TMKerr: (October 01, 2010 9:24am)
I may be naive, but if the govt would have bought down every backed loan to 4% in the first place: Banks across the board would have been helped and stayed intact, builders would have been able to continue building, Borrowers could continue to borrow & buy property, less bankruptcy, less unemployment, more consumer purchases = taxes paid back into the system. Heck govt could have also guaranteed 4% on future purchases for 2-3 years, to insure a turnaroud. I'm thinking a cross-the-board buydown would have been less costly and fed growth. Only downside is that it wouldn't have been such a clean-up on corrupt businesses. Why is this so impossible to see/do??
barryl: (October 01, 2010 8:44am)
Cardoza has balls and only studdied his history: so here it is: Marriner Eccles who chaired the Fed Res Board from 1934-1948 and considered the archetect of the great clean up from the depression. simplicity here, loosen the money supply + low rates = return to prosperity, building from the ground up + top down=return to prosperity during the current trip. In the spirit of quantum, lets break it down even smaller for those of you who failed economics 101::heres the formula: specific bailouts+everyone gets a no doc refi across the masses +job growth commenses= the same; the momentum needed to turn the great wheel.
epensabene: (October 01, 2010 1:43am)
Very creative Mr. Cardoza, after all for the last 20 years we been living in a false economy. Good Luck.
5pence: (September 30, 2010 7:53pm)
I will re-post this in the morning. Appraisers, the 2 people I've told you about are meeting with the Federal Reserve consumer affairs division to discuss implementation of the "reasonable and customary fees" as outlined in the FINREG bill, and they need your help. "WE NEED: ANY and ALL evidence you have of what the Consumer is being charged versus what the Appraiser was actually paid for the Appraisal. ANY evidence of AMC's withholding funds because the loan did not go through. ANY Evidence of AMC's dictating what your Fee is or should be. ANY evidence of HUD1s and can correlate them with payment receipts. ANY preprinted statements from AMCs saying your fee is not negotiable and/or the "market fee" is $X.XX and you must accept work at this price. Please send all examples in PDF format, continuously in one document if possible, but not necessary." Link to help them help us is http://appraisersforindependence.com/index.php?option=com_content&view=frontpage&Itemid=53
george: (September 30, 2010 7:16pm)
Cardozza is not crazy, with some limits, like stable and continuing income. Whay shouldn't people working hard and paying their payments at abave market rates be able to participate in the reduced rates. If they handle the higher rates, they should be great at reduced rates, maybe even great going down to 15 year terms and corrected the negative equity more quickly than anticipated. Let me see - not as much reason to walk away, more disposable income, less frustration about not participating in government bailouts and hoakey refinance programs. More diposable income? An economic stimulus maybe? Less homes abandoned due to high payments and negative equity. Not such bad outcomes, right?
Fl Mortg Lady : (September 30, 2010 5:04pm)
If you would like to join efforts to discuss rational ideas to HELP those in homes who aren't bad people and are STUCK in this upside down economy, please e-mail [email protected]. No partisan BS allowed.
brad: (September 30, 2010 3:53pm)
How long will it take to refi 30 million people? I need to hire some staff. Is it possible to still get conditioned by U/W on stated income, asset, value, credit, for more documentation?
SoldinOregon: (September 30, 2010 3:39pm)
I think Rep Cordoza's HOME ACT is absolutely what our country needs. These loans are already backed by the Gov't and dropping interest rates will keep people in their underwater home, put more money in their pocket to spend month (some at least) which means goods are purchased which means people are hired to work. I know the downside might be no commission check for me selling it as and REO/Short Sale or Mortgage Brokers refinancing but it will help stablize our housing market and it will also create jobs.
iam 2520: (September 30, 2010 3:20pm)
and why not make them all cash out refis at the same time. Check the box for 10,25 or $50,000. That would stimulate the ecconomy and shake the rest of the globe up to the stark reality that the US is broke and is playing with monopoly money.
5pence: (September 30, 2010 3:13pm)
Owl tree, as long as the banks control the appraiser and the process it will be "easy money" corrupted. Diametrically opposed goals and expectations for both these entities. For the appraiser the protection of the public trust is (or should be) foremost. For the banksters, it's all profit driven. They won't go with the most honorable and skilled appraisers because that cuts into their bottom line and they know they're too professional to be corrupted to do their will. It's exactly like leaving the fox in charge of the henhouse. Having the banks in control of the appraisal and loan process before they do their risk management (which should be their only concerns in the process!) is really a perversion of the system. The corruptible appraisers get rewarded through AMC's while the good ethical appraisers are starving. Banks that should not exist own AMC's that should not exist that hire appraisers that shouldn't have a job. There's certainly a theme running through that...
W.R.Buchanan: (September 30, 2010 3:12pm)
Yes guys: If I can get my $700,000 adjustable loan refied to 4.?% fixed with no documentation period, I DON'T CARE IF EVERYBODY WHO IS INVOLVED GOES BANKRUPT. It won't affect me in the slightest!!! The first part of the presentation today was about how the govt was going to swallow a bunch of stock losses and end up paying 2.2 Billion to Citibank? Here's the real question??? How much of the bank give away money has actually benefitted consumers? Short Answer: F%^& ALL! So if they are going to finally throw me a bone, I don't care who looses on the back side!! Given the state of the completely criminal banking industry, If you DO care about them, You are either Totally Naive or Completely Stupid !!!!!!!!!!!!!!!!!!!!! Really guys, How many times must you get screwed before stop bending over?
Fl Mortg Lady : (September 30, 2010 1:11pm)
Ditto to best benefits listed offering lower rate refi regardless of appraisals: serve those customers who have been shut off of current refinance opportunities. if we don't do something to stimulate spending… black hole recession is never going away. Yeah, its crap for LOs short term but just think a stimulated economy means people have jobs, buy houses, trade up, refinance. Which do you prefer.. the no hope of now or the potential of a stimulus that actually can work?? and a benefit to the government through lower defaults. Combine with a legitimate option to short-refi so that deeply underwater homeowners have more incentive to stay and this could FIX EVERYTHING! More money for mortgage industry, more money for families to spend on something other than their mortgage, fewer foreclosures.
barryl: (September 30, 2010 12:03pm)
gwb- then my apologies extended here for the ball player confusion, on the points here, I suspect where in complete agreement.
georgewasbest: (September 30, 2010 11:54am)
Firstly, georgewasbest refers to the professional soccer player - George Best. Not GWB Secondly, contributors are missing the point. You're financial future is doomed if this economy is allowed to slide into further stagnation. The only rescue is via getting the consumer employed and back to spending and no braindead politician can grasp that. We've become a service oriented nation so its not as if we can look to manufacturing to save us.
barryl: (September 30, 2010 11:00am)
their is no secondary market, only the gse's, gnnma, and a few small thrifts, lower the pressure, and default reduction results along with the reduction of servicing transfers, I mean what a 4% bulk loan purchase worth when the dust settles? A job for the super banks only. Time for a lunch break my sausage and pepper hero now, as that was a special recipe posting from one heck of a legend yesterday.
barryl: (September 30, 2010 10:52am)
"not crap for the retail lo's", production numbers will skyrocket short term.
Owl Tree: (September 30, 2010 10:50am)
This idea would play havoc with the secondary market. A better idea would be to establish a non-conforming GSE that would serve those customers who have been shut off of current refinance opportunities. However, I would favor a refinance process that eliminated appraisals. The appraisal process is utterly broken. I'm tired of seeing my customer's homes being compared to vacant properties. If my customer has good credit, and can repay the debt, I don't see why they should be held hostage by AMC sweatshops.
barryl: (September 30, 2010 10:49am)
georgewasright- he once said, "have a sitdown with your bank and do a work out". From the top chair in the country at the time; that was the vision. excellent bill and it should pass- your abosulutely right " if we dont do something to stimulate consumer spending". that spending will rocket to the top where jobs will open up, as the "bigboys" report higher sales, across the board. Lets go Dallas Cowboys this year!
georgewasbest: (September 30, 2010 10:29am)
Guys, at least its a move that recognizes that if we don't do something to stimulate spending by the middle classes this black hole recession is never going away. They estimate it puts $70 BILLION a year back in consumers pockets. Yeah, its crap for LOs short term but just think a stimulated economy means people have jobs, buy houses, trade up, refinance. Which do you prefer.. the no hope of now or the potential of a stimulus that actually can work??
barryl: (September 30, 2010 10:03am)
lower dti across the masses the choices are glim. lets keep soylent green a scifi only.
barryl: (September 30, 2010 10:03am)
lower dti across the masses the choices are glim. lets keep soylent green a scifi only.
barryl: (September 30, 2010 10:02am)
lower dti across the masses the choices are glim. lets keep soylent green a scifi only.
mdeery: (September 30, 2010 10:01am)
Lets throw in a new fridge, a $500 gift cert to Home Depot and a 50 inch tv screen too on top of the new loan program being mentioned here. I think this guy was hanging out with Barney Fwank the night before he came up with this new loan idea and had one too many gerbils stuffed in his whoops a daisy. Jesus christ these politicians should be covered in cow dung and fed to the wolves!
jdillingham: (September 30, 2010 9:45am)
The bill to allow all FNMA FHLMC FHA loans to be refinanced no doc is a super idea. FNMA, FHLMC and FHA are all on the hook for these guys if they go bad anyway. If the principal balance is the only thing that is refi'd and the borrowers get a lower rate it makes the loan easier to repay and thus less likely to default. They would probably need to be put into segragated pools and the market would price them accordingly, so maybe they wouldn't go all the way down to market but still it would be a benefit to the borrower and a benefit to the government through lower defaults. Also, that would free up a little cash every month for these borrowers who could then go out and spend it which could stimulate the economy. The only down side is the increased speeds on the existing higher rate coupons. Who really cares much about that?
smithchelle: (September 30, 2010 9:34am)
If the people getting the stated/stated/stated loans already have loans, there isn't any new risk to the market in simply lowering their rates. It seems like there would be less risk of default. The only increase in risk would be for the taxpayer in assuming risk that might otherwise have been bourn by banks. I think its a good idea though. Combine it with a legitimate option to short-refi so that deeply underwater homeowners have more incentive to stay and this could FIX EVERYTHING! More money for mortgage industry, more money for families to spend on something other than their mortgage, fewer foreclosures.
Utah Mortgage&Real Estate Guy: (September 30, 2010 9:13am)
I think 'MortgageSecurity4U' said it best. The mortgage broker can take advantage of this new program to make some more money, and become more competitive with the Retail LO with the Big 4 Banks. It will give the homeowner (underwater and the like)incentive to keep making their payments and stay in the home. Less Foreclosures, Less Short-Sales, Less Home Supply. ***SIDE NOTE*** An even better idea, allow the Fannie/Freddie loans to be Qualified Assumable Mortgages just like FHA has always been. It will give the prospective HomeBuyer an incentive to entertain buying a normal listing, which in the long term, stabalizes home values faster, there is less Inflation RISK to the housing market (IE: interest rates skyrocketing), the government (IE; the tax payer)will not have to spend billions to keep interest rates down for a significant period of time to help the housing market recover, and it will give the banks a kick in the A** to work on getting rid of their shadow inventory.
MortgageSecurity4U: (September 30, 2010 8:55am)
Think of the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc as a streamline loan-modification that we can get paid on! It will stablize values by keeping folks in their home. It will lower forclosures and I assume it will have some sort of PM attached to it.
MortgageSecurity4U: (September 30, 2010 8:55am)
Think of the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc as a streamline loan-modification that we can get paid on! It will stablize values by keeping folks in their home. It will lower forclosures and I assume it will have some sort of PM attached to it.
MortgageSecurity4U: (September 30, 2010 8:55am)
Think of the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc as a streamline loan-modification that we can get paid on! It will stablize values by keeping folks in their home. It will lower forclosures and I assume it will have some sort of PM attached to it.
MortgageSecurity4U: (September 30, 2010 8:55am)
Think of the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc as a streamline loan-modification that we can get paid on! It will stablize values by keeping folks in their home. It will lower forclosures and I assume it will have some sort of PM attached to it.
MortgageSecurity4U: (September 30, 2010 8:55am)
Think of the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc as a streamline loan-modification that we can get paid on! It will stablize values by keeping folks in their home. It will lower forclosures and I assume it will have some sort of PM attached to it.
MortgageSecurity4U: (September 30, 2010 8:54am)
Think of the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc as a streamline loan-modification that we can get paid on! It will stablize values by keeping folks in their home. It will lower forclosures and I assume it will have some sort of PM attached to it.
Mandy: (September 30, 2010 8:51am)
Insanity....they have officially gone insane. Maybe they should take the new Loan testing. Heard there was a test in there to tell if you were insane.
Utah Mortgage&Real Estate Guy: (September 30, 2010 8:43am)
Now addressing the STATED INCOME, STATED ASSET, NO CREDIT HISTORY, etc. The BIG FOUR have been doing loans just like since the inception of Making Home Affordable. If a homeowner is current on their loan, they can refinance with NO INCOME DOCUMENTATION, NO ASSETS DOCUMENTATION, CREDIT SCORE IS IRRELEVANT. The only issue with these loans is the LTV.Sometimes an automated appraisal is used.Sometimes a full appraisal is used.Sometimes the original Value (when the curretn loan was originated) is used. You wonder why the REATIL loan volume has went up and the Broker volume has went down. This is a huge factor. I am self employed Mortgage Broker and Real Estate Agent. I own 6 properties. Can't document enough income according to my tax returns to qualify, however Bank of America (who holds 4 of the loans) refinanced all 4 of those loans to rates in the low 5's for my rentals and high 4's for my primary residence with NO INCOME, NO ASSET, NO APRAISAL. It is an easy concept. Responsibility
Utah Mortgage&Real Estate Guy: (September 30, 2010 8:35am)
TO ALL the have addressed the Cordova REFI, Frank/Brian LEFT ONE BIG FACTOR OUT OF THE DAILY. THE LOAN BEING REFINANCED HAS TO BE CURRENT FOR A MINIMUM OF 24 TO 48 MONTHS. THE FINAL NUMBER OF YEARS THE LOAN HAS TO BE CURRENT HAS NOT BEEN FIINALIZED. SO BASED ON ALL YOUR COMMENTS. THIS WILL NOT HELP THE DEADBEATS THAT HAVEN'T BEEN MAKING PAYMENTS TO THEIR CURRENT MORTGAGE. This is the easiest concept ever proposed. Take a responsible homeowner making their payments that have already qualified for the original loan at a higher rate, that have showed discipline in making ALL their payments for a significant period of time IN THIS ECONOMY, the government tells the Mortgage Insurance Compnaies to SHUT UP AND DEAL WITH IT. I know that the professionals that follow TBWS have all had atleast one client that has been current on their loan but couldn't refinance because of tighter guidelines. Where is the risk for a responsible homeowner to take advantage of the lowest interest rates in decades
GaryP: (September 30, 2010 8:22am)
Wait a minute! I just thought of something. Didn't the Dodd/Frank Bill outlaw stated loans? The Merkel amendment specifically said full doc only. So, we're going to pass a new law that makes them legal again? This is rediculous and its never going to happen. MND had a good write up on this proposal yesterday and basically their opinion was "don't hold your breath."
JoeParsons: (September 30, 2010 8:16am)
@screech: Loans with no down payment is what "got us here in the first place"? If that's so, how do you explain the fact that VA loans have a significantly lower default rate than conventional loans today? How about this: the crisis was caused by the availability of 100%+ financing, with stated income and stated assets, to borrowers with low credit scores. This environmnent existed because those loans could be sold to investors and securitized into Mortgage Backed Securities (MBS), then incorporated into complex, arcane derivatives called Collateralized Debt Obligations (CDOs). Those exotic securities were insured with Credit Default Swapts (CDS) issued largely by a little company called American International Group (AIG...'member them?). Finally, those lower-than-snakesh*t securities were rated AAA by the rating agencies (S&P and Moody's), which enabled the sale of the securities on the market. All this really began in the wake of Gramm-Leach-Bliley, enacted in 1999.
TheRistowGroup: (September 30, 2010 8:04am)
More STATED INCOME refinances are a good idea? Lending refi business will boom at the expense of delaying recovery for the industry with yet another wave of defaults since a couple hundred bucks savings a month (in most cases) is not enough to help.
screech: (September 30, 2010 8:00am)
I am a real estate appraiser. We saw this mess coming a mile away. And yes there are some good appraisers that did not sell their soul to make a buck. Many of these people should have never been in these houses in the first place. I cannot tell you how many I go out to where they are driving either a new Navigator or Escalade. Everything in the house is new. They thought Obama was going to help them (give em money). I think the Govt should fix Fannie & Fred first. This plan on a whole does not seem bad, but we need some checks an balances. Letting these people into these loans with nothing to lose is what got us here in the first place. Everyone blames the loan officers (There are some bad ones out there), the Realtors, and the appraisers. Guys, none of us make those rules. They come directly from the Govt and we know there are some bad people there. We need to fix the problem and quit putting bandaids on things. The ship is sinking gfaster than you think.
rgarrett: (September 30, 2010 7:57am)
msmammypie; yessireeee! huge freaking racket. I am so damn tired of the Freaking govt and their cronnies of Dodd, Frank,... They are so removed from reality. they are hurding the BLIND consumer to the higher priced, lower quality big banks for mortgages. But they are doing us brokers a samll favor by hurding the unqualified and unmotivated originators from the broker world to that of the Big Banks - thx for small favor.
edtheloanguy: (September 30, 2010 7:54am)
The insanity of the government blows my mind! When Obama introduced the 1st stimulus package of $760 billion, one of the senators suggested doing a subsidy for all existing mortgages and reducing the mortgage rates for everyone in the country to 4.50% fixed. The subsidy would have cost the federal government $56 billion but they would have saved $700 Billion. The subsidy would have prevented many people from losing their home, Freed up monthly disposable income and decreased the losses at banks. The senator was vetoed in favor of the much more expensive stimulus that had little lasting significance and plenty of incentives for the people who approved it. Now that we've spent billions in worthless programs, this same idea is back on the board as some revolutionary idea, when we could have done it 18 months ago and saved a lot of heartache and spending. CRAZY!
JoeParsons: (September 30, 2010 7:53am)
For those who think this suggestion is sheer insanity (or pure political pandering): consider the VA loan: The borrower presumably has no skin in the game (no down payment). Very liberal underwriting. And, with a streamline refinance (IRRRL), the ability to lower the rate with NO appraisal. NO credit score requirement (mortgage rating only). NO job or income verification. A veteran borrower in Chapter 13 BK can get this loan. And the default rate of VA loans? Around 5%.
B W: (September 30, 2010 7:53am)
Now think about this, 92% of homeowner are making their house payment. If the program allows "only" homeowner who are making their payment on time for the last year to qualify would that not encourage more on time payment. If the AVG Homeowner saved about $300.00 a month the multiplier effect would be so MUCH BETTER than any stimulatives program. If you are making your payment at $2,500 why would you not make your payment at $2,200. Now what are you going to do with the saving? The client will spend some of their money and that's what our economy needs. Everyone in the industrial knows that appraisal are stopping most refinances. This program is what I believe would kick start our economy. Think about it.
FredG: (September 30, 2010 7:52am)
This idea is not realistic in its application. There needs to be a conduit to allow credit worthy borrowers to refinance regardless of their equity position. The FHA streamline is a good approach to the problem and could motivate more homeowner to make their payments and help reduce the number of defaults... It would make sense to offer some solution to FNMA and Freddie borrowers.
bucco: (September 30, 2010 7:37am)
Think how cheap these loans would be (upfront) to do. Get a title and go, I love it. IF the government already has the loan they are already on the hook for it. I say raise the rate a half to adjust a little, but this would be a good/cheap alternative for people to keep their homes or refinance. And if they don't pay this loan, then fine, foreclose and end it. they were going to get foreclosed on anyway...
bucco: (September 30, 2010 7:36am)
Think how cheap these loans would be (upfront) to do. Get a title and go, I love it. IF the government already has the loan they are already on the hook for it. I say raise the rate a half to adjust a little, but this would be a good/cheap alternative for people to keep their homes or refinance. And if they don't pay this loan, then fine, foreclose and end it. they were going to get foreclosed on anyway...
msmammypie: (September 30, 2010 7:32am)
To gheinecke: We had a real estate licensee whose license was revoked by the REC for loan fraud, who we have heard was hired as a loan officer at Wells Fargo!! What a racket....
5pence: (September 30, 2010 7:16am)
For instance, the GSE's are hitting up the banks for losses on "fraud" where the fraud is more than obvious to anyone. Who's paying for all the defaults where fraud is in question? Take a guess.
GaryP: (September 30, 2010 7:15am)
Just as an example of my point about the continuing tightening of investor overlays, I just got an email from our secondary market folks. Borrowers are now being required to payoff any collections over $500 (excluding medical). This is definitely going to have an impact on a lot of those 620-640 FICO FHA borrowers that are already getting arder to close. If you haven't seen this yet, keep an eye out for it, it's on the way.
PAREOSales: (September 30, 2010 7:13am)
Strictly speaking from a REO agent's perspective; it's the greatest idea I've ever heard of!
5pence: (September 30, 2010 7:12am)
24% are moving to Amsterdam in your poll LOL. Cardoza, It's a continued bailout for the banks since we have to buy everything they write through the GSE's and will be paying for losses. They are after our Social Security
PaddyMurf: (September 30, 2010 7:12am)
I don't have a problem with the re-entry of No Doc/ No Income verification loans, it's the stated credit rating that will sink this program. You have to remember these borrower's already have skin in the game with regard to already being married to their loan company. If it thwarts another wave of foreclosures or short sales it's a winner. The future downside is that we'll get back to or above the old seven year average that people stay in their homes. Who wouldn't stay put if their enjoying a low rate mortgage?
pacostacos: (September 30, 2010 7:11am)
Howsabout tweaking it like this...no lates in the last 12 months, provable income, provable assets (I think 12 months worth is going to be too much), and let them refi at current rates , regardless of value. it woudl helpl a LOT of people!
Daggone: (September 30, 2010 7:09am)
Offering a refinance to people who are paying their mortgage on time, no docs, no credit, NO APPRAISAL! - an excellent idea. I have people now who are paying their mortgage on time and cannot refinance because of all the "rules" and most particularly HVCC. Helping these people will do more to stabalize housing and help the economy than many of the other options thrown out there. It would eliminate the need for the underwater loan that FHA just came up with.
cfinnegan: (September 30, 2010 7:03am)
This plan sounds like it should have been implemented long ago. These "subprime" loans will be given to people who already have mortgages. This refi will enable distressed homeowners the oportunity to hold on to their homes instead of short sale or foreclose on them. Isn't that what the loan mods were supposed to accomplish? Loan mods are a joke. With this program the current distressed homeowners would be guaranteed a new payment, thus potentially helping them. If they still default, well guess what - they would have defaulted anyway on their original loan, which was still a government backed loan anyway. Also the homeowners that are not in a distressed situation, the ones who are most likely helping to keep this economy going, deserve to have a lower payment, and they in turn will have more money in their pocket to spend, thus helping the economy even more.
DanSchweihs: (September 30, 2010 6:58am)
Also since this potential new program is refi only, it does not seem to generate any new borrowers. New borrowers will do more to reduce the glut of unsold homes and possibly get the economy back on track. Copy and paste this link into your web browser: http://www.hard-loans.com/Solution.htm Change the numbers in the example at the end of this page to 5% FHA upfront mortgage fee; 10% foreclosure rate; and 30% loss rate. You will notice that the numbers work and everyone benefits. The “insurance” paid by the nine first-time homeowners that stay in their homes pays for the loss of the tenth that forecloses. But the good news is that since renters are buying, nine homes are taken out of the glut of unsold homes. Nine renters become homeowners. This solution has a net gain to America. First-time homeowner’s borrowers payments are lower because there is no monthly mortgage insurance. The arithmetic is difficult to argue with. No taxpayer subsidy is required.
riblah: (September 30, 2010 6:55am)
What's with all the double posting?
KASSGA: (September 30, 2010 6:55am)
Cmart - why only Owner Occupants? Do you still belive the investors are the evil ones who destroyed the Real Estate market? Or, was it maybe the BANKS? The default on investment properties affectes your neighborhoods value the same as an owner/occupant. Not to mention, rents for investors has declines dramatically through no fault of their actions, some well below their once covered loan payment. Refinance all of them and watch this housing market recover rapidly!!
KASSGA: (September 30, 2010 6:49am)
Why would you think Cardoza's plan stinks. Loan Officers would still get the re-fi business, right? If they had done this a long time ago,just think of how many foreclosures there wouldn't have been. I think it would have saved a lot more homes and values across the country compared to the percentage that would have defaulted with lower payments. Neighborhoods would have held their values helping those who didn't take bad loans and have been harmed with all the foreclosers. Best idea I've heard lately!
CMart: (September 30, 2010 6:46am)
Cardoza's refi idea will help home owners get a lower monthly payment and keep foreclosure rate down. Every home owner has its story, for lower credit score, late payments or no assets. So if as long as the home owner are making their mortgage payments and they should be giving a chance to take advantage of the current rate. The Bank where giving millions of dollars to modified loans and they found a way to spend that money but not on modifications. So now with Cardoza's refi idea, this is going strait to help the home owners. There should be guidelines on loan amount and only for owner occupied properties.
DanSchweihs: (September 30, 2010 6:38am)
Who gets screwed and do they have a memory? Somebody invested in government guaranteed MBSs and expected a return of x% and a normal refinance cycle of five to seven years. That somebody is probably a pension fund, or some other institution that was investing for someone’s retirement. That somebody will get their principle back early and have to re-invest at 3.3% (current MBS return from today’s Wall Street Journal). So the problem with “giveaways” like this is that they are not actually “giveaways”. This is a transfer from investors to borrowers. There is no net gain. Just a transfer. More manipulation of American citizens prior to the election?
GaryP: (September 30, 2010 6:35am)
Hey folks, regardless of what a good idea a refi program like this might be or not be, let's look at this from the investor side. Who's going to buy these loans? Has anyone looked at the direction that investor overlays are continuing to head? And they are just going to throw all of that away because Mr. Cordoza says so? Get real. This is just as realistic as 580 FICOs on max LTV FHA loans. We're down to one investor still willing to buy 620-640 FICO FHA loans now. What does that tell you about the investors appetite for risk. On top of that, pre-pay speed and loan volume has a big impact on MBS prices and pushing through all these refis at one time is going to just push rates up to the point that the refis aren't going to be nearly as advantageous. At the same time, the higher resulting rates are going to kill a lot of purchase loan volume and let's think about what that would do to our economy. Again, another case of unintended consequences and blue sky economics.
5pence: (September 30, 2010 6:32am)
Guys, if you live in Pennsylvania, vote for Senator Paul Kanjorski. He's the only one that gets it. He's a great friend of the appraiser and the broker and he has the guts to stand up for us against the banks like no one else in political office will. We absolutely need people like Kanjorski in there, a champion of the broker and appraiser. If you're not in Pennsylvania but you have contacts there, let them know that Kanjorski has to win to keep the broker and appraiser profession alive and out of the hands of zombie banksters.
Fl Mortg Lady : (September 30, 2010 6:27am)
p.s. Freedom Mortgage is now soliciting current, good paying customers and offering them refi to lower current rates. NO new appraisal needed (which is where these refi's die anyway!), no income check. The premise is... reward the good paying clients in your portfolio and don't make them do something stupid like not pay their mortgage to get a lenders attention to possibly consider a short refi or short sale. Smart move by lender taking care of existing good customers!
indyhomefinancedotcom: (September 30, 2010 6:25am)
I think it's a decent idea to offer some type of streamline refi, regardless of ltv. If the tax payers are on the hook for the huge bank bailout, why can't they benefit from lower rates? I know a ton of people who have rates in the 6's and even as high as 8% that can't refinance because of negative equity. With the difference they're spending on mortgage payments, they could invest, pay other debt, go to school, buy crap they don't need, start a crystal meth habit, whatever.
indyhomefinancedotcom: (September 30, 2010 6:24am)
I think it's a decent idea to offer some type of streamline refi, regardless of ltv. If the tax payers are on the hook for the huge bank bailout, why can't they benefit from lower rates? I know a ton of people who have rates in the 6's and even as high as 8% that can't refinance because of negative equity. With the difference they're spending on mortgage payments, they could invest, pay other debt, go to school, buy crap they don't need, start a crystal meth habit, whatever.
GaryP: (September 30, 2010 6:24am)
Hmmmm, LO income a up 17% in 2009. Compared to what, 2008? Does anyone besides me remember 2008 and what a disaster that was? Please!!! On the flip side, I can say that one good thing came of 2008. We got rid of a lot of part-time, con artist, rookie, and amateur LOs that mostly went back to selling used cars or their old career at Dennys.
tmyke0977: (September 30, 2010 6:23am)
This would be a type of individual mortgage insurance that is specific to each loan and its set of circumstances. It mitigates risk down to the individual instead of spreading it out amongst every FHA loan out there. It would keep costs down and protect the investor as well. I don't know, maybe i need another drink!!
Fl Mortg Lady : (September 30, 2010 6:23am)
Hmmmmmm..... I agree with bfore90210. In Florida, PEOPLE ARE STUCK....... can't refi unless they have equity, 52% of homeowners are upside down..... homeowners are angry that a short sale that screws up their credit is only option.... this idea.... may put current homeowners and purchasers on the same playing field. Right now, a good majority of homeowners CAN'T (not won't) take advantage of lower rates!
tmyke0977: (September 30, 2010 6:17am)
The program could be tweaked a bit in this way; For homeowners who have credit scores below 660 but above 580 would be required to have a "set aside" or monies held in escrow equal to 6 months of principal and interest payments incase of early default. Those homeowners with 580 or less credit scores would be required to "set aside" or escrow 12 months of principal and interest payments. Since there is no appraisal, the "set aside" would be financed on top of any base loan amount. "SKIN IN THE GAME" What a country!!
gheinecke1: (September 30, 2010 5:39am)
I meant GOV"T SACHS. Sorry mistype!!
gheinecke1: (September 30, 2010 5:38am)
I meant GOV"T SACHS. Sorry mistype!!
gheinecke1: (September 30, 2010 5:37am)
There is plenty of blame to go around. Personally I think the cronies at Godman SDachs should go to jail, but due to their political connections it will never transpire. They are one of the brainchilds behind the crisis. They invented these loans and had the brokers sell these. Whose fault is it. I recently had to let go a loan officer because after bringing her on from a BANK she was not bondable!! She has a felony!!! Guess what ? The bank re-hired her as a loan officer. HMMMM!!!!
bfore90210: (September 30, 2010 5:34am)
I would modify this refi proposal. I think if you made your mortgage payment on time in the past 12 months, then you should qualify to refinance. There should be strict guidelines on broker and title company compensation. No appraisal, no income and no credit check. It should only be on primary houses first until the waive of refinances subsides. We did this back in 2002 when the rates dropped substantially and the banks did not want to lose the business written in the past year and a half.
St Pauly Girl: (September 30, 2010 5:33am)
Hey Guys...the new gov't refi loan option sounds very much like the Streamline refi paramaters from years gone by. No credit scoring (only a mortgage history report & you are moving forward. Might not be bad if it can help prevent strategic defaults.
acd: (September 30, 2010 5:29am)
I am not in the industy. I just wanted to compliment you on the awesome job you do for sales nourishment. Awesome. I tune in every morning to gain the energy to charge out of the office. Keep up the good work. You should train others in other industies to attempt to do the vodoo that you do so well.
acd: (September 30, 2010 5:28am)
I am not in the industy. I just wanted to compliment you on the awesome job you do for sales nourishment. Awesome. I tune in every morning to gain the energy to charge out of the office. Keep up the good work. You should train others in other industies to attempt to do the vodoo that you do so well.
em811: (September 30, 2010 5:16am)
The new refi idea is a little extreme. All they need to do, is do it without the appraisal. Make the people qualify with income, credit, assets, but not have to get an appraisal and everyone will be able to take advantage of the great rates. ( atleast the ones that deserve to)
joephoto5: (September 30, 2010 5:15am)
I don't deny that "subprime" borrowers have a higher-than-average rate of defaults. BUT, I do not think they are the MAIN factor in the housing crisis. I feel 90% of the blame should be on the NEG-AM (Pic-A-Pay or Pay-Option) loans. And 90% of the people I have known in those loans either were NOT TOLD by their brokers that the min-payment would ever increase, OR, were told that they could simply re-fi again in a couple of years and thus forever keep the lower min-payment. I would support this plan for PURCHASE MONEY loans, (but ONLY if they were lied to or misled); or for the remaining purchase-money payoffs in a re-fi. As far as I am concerned, they SHOULD still-have the extra money from a cash-out re-fi.
joephoto5: (September 30, 2010 5:14am)
I don't deny that "subprime" borrowers have a higher-than-average rate of defaults. BUT, I do not think they are the MAIN factor in the housing crisis. I feel 90% of the blame should be on the NEG-AM (Pic-A-Pay or Pay-Option) loans. And 90% of the people I have known in those loans either were NOT TOLD by their brokers that the min-payment would ever increase, OR, were told that they could simply re-fi again in a couple of years and thus forever keep the lower min-payment. I would support this plan for PURCHASE MONEY loans, (but ONLY if they were lied to or misled); or for the remaining purchase-money payoffs in a re-fi. As far as I am concerned, they SHOULD still-have the extra money from a cash-out re-fi.
amycearnal: (September 30, 2010 5:12am)
Check out Stephen M. R. Covey's book "The Speed of Trust". High trust environment can often yield better than average results. Govt is already on the hook for this stuff so making it where it is easier for folks to repay at a lower rate makes sense to me. But that might be the good ol' boy thinking from down here in Texas. We try to do right by folks.
MortgageScribe: (September 30, 2010 5:02am)
While that "silly" program may get passed, no investor is going to buy the loan, so it will be one more worthless loan program that somebody spends way too much time, money and effort on. And no homeowner gets to use.
NJMink: (September 30, 2010 4:55am)
I saw a piece on CNBC about this program, it would allow the GSE's and FHA/VA to pay the service a fee to simply modify the loan. Just what we need, another reason for true mortgage professionals to be jobless. The democrats are trying their best to make USA socialistic. This guy is up for re-election and trying to avoid the chopping block from his voters. I just hope this idea doesn't get any legs.
KKS: (September 30, 2010 4:54am)
OK, definition of insanity may have just expanded. Insanity - doing the same thing over and over, expecting different results and getting the same results. We've already shown via modifications (over decades including present) that lowering rates, and many times decreasing principal balance (note FHA via partial claims on MI is common) does not work. So lets kill our entire "private" banking system to ensure the National Bank system (more gov't control of our lives), have the gov't own all the real estate and then have to print so much money we are in 1000% inflation every month. Observe many other countries who have tried similar. Cardoza is nuts....short term and long term his proposal makes no fiscal sense. Yet another gov't handout/free lunch mentality and everyone "owes me" mentality rather than holding folks accountable for actions. Complete and utter insanity (and yes, I reside in one of the top desimated states re foreclosures and unemployment).
linda-joey: (September 30, 2010 4:36am)
Agreed it would be helpful, but at who's expense? We cant get a loan approved these days without documenting every penny in a bank account...I say do expand the parameters but many folks are still in the homes where they did a neg am stated income loan...have not made a payment EVER and they would get this awesome deal too?
KellyBailey: (September 30, 2010 4:30am)
It will allow people (who are not paying their mortgage now)an opportunity to NOT pay their mortgage for an additional 6 months. Why? B/C once the loan is refi’d, the new lender will have to wait for several months of non-payment before they can start the foreclosure process. I just can’t believe it. Well, they might as well print some more money. How could they possibly do this? I still have some faith in America- it wont pass. kell~
1st in Michigan: (September 30, 2010 4:08am)
As I heard it, they are talking about ReFi, not new purchase mortgages, So, aren't they just resetting all mortgages to the current rate and term? I could see this actually helping a lot of people. I've seen foreclosures due to the homeowner's bank refusing to help with lower rate or resetting term, which would lower the payments. Heck, let's try it, what would it hurt?
Chukster: (September 30, 2010 2:11am)
Don't forget to Vote, get these moron's out of office. They have no idea what they are doing, especially Barnie Frank.
Chukster: (September 30, 2010 2:10am)
Don't forget to Vote, get these moron's out of office. They have no idea what they are doing, especially Barnie Frank.
zorro1540: (September 30, 2010 2:09am)
let's see: stated income, assets, value, credit. the only thing missing is stated LTV!! let's just cram down every loan to, oh, say 50% LTV of the stated value!! Dennis Cardoza's plan has no basis in economics, business or morality. If he really wants to buy votes for the democratic party, why doesn't he propose this: Every homeowner should be allowed to sell their home for the value it was worth in 2006 (aka "the peak of the market"). Since today's values are far less than the peak, we'll "simply" send a check to every seller for the difference, courtesy of the U.S. taxpayer. Voila! "Fairness" restored to all!!