Dennis' Mortgage Blog

Question of the week:  What is the Homeowner Affordability and Stability Plan?

Answer:  I wrote a month or so ago about the Obama Administration’s proposal to make it easier for many homeowners to refinance their properties, and the Homeowner Affordability and Stability Plan was established.  The plan works through the GSEs (government sponsored entities: i.e. Fannie Mae and Freddie Mac) and allows those with mortgages held by either of the GSEs to refinance under the HASP program if their loan on their current 1^st Trust Deed is between 80% and 105% of the value of their property; if you home value is $400,000 and your mortgage is between $320,000 and $420,000 you are eligible for the program.  Note that if you have a 2^nd deed of trust (including HELOC) you will not be eligible for the program unless the holder of the 2^nd is willing to subordinate their loan behind the new refinanced mortgage.  There are several other factors, but for many people who purchased or refinanced between 2000 and 2007 with less than 20% equity chances are a piggy-back 2^nd was part of the transaction.

As you can imagine Stratis Financial, and Dennis C Smith, are receiving many phone calls and emails regarding eligibility under the program.  If you feel you are eligible I ask that you call and email me, and please have some patience on a response as priority is made to respond to those purchasing their homes first.  When you call have ready your information regarding your loan balance, interest rate and payment, and be prepared to complete a loan application over the phone so we can get you in line as soon as possible.  Note I am no longer able to lock in rates and terms until I have a signed application package in my office.

This program will help many homeowners, it is also going to create some backlogs in the pipelines from beginning to end, as such we are recommending all locks for the program be taken on a 40 day basis to account for slower processing, appraisals, underwriting, drawing of docs and funding.

Special thanks to John Willett for pointing out to me my math mistake last week, two points on $300,000 is $6,000 not $8000 as I wrote.  This is why John is a financial advisor and I am merely a mortgage broker who is calculator dependent (and failed to use it last week!).

Have a question for me?  Ask me!  

I told you so.  There I said it, now I feel better.  For the past couple of weeks I have commented on how much cash is sitting in banks and investment houses.  As well, early in the year I wrote how the recession would be bottoming out sometime in the fall, possible early winter 2009.  Yesterday we learned that Wells Fargo earned $3 billion in the first quarter of 2009—a record amount for the bank in the middle of a recession.  In reporting on the earnings the Associated Press said, “banks are sitting on piles of cash.”

Surely one kernel does not make and ear of corn, and one bank reporting huge profits does not make the end of a recession, but it is a start.  Wells’ reporting shows there is some financial health returning to the credit and financial sectors.  Combined with the growth in the stock market since Treasury Secretary Geithner announced some concrete policies and procedures the Treasury would be taking in purchasing mortgage backed securities and other maneuvers, the financial sector is beginning to put cash into the economy.  Or at least getting ready to begin to put money into the economy.

All this news causes me to stick by my statement of a few weeks ago that very soon our national economic concern will not be the recession but rather inflation.  Inflation means higher prices for commodities and services (and houses) and higher interest rates on credit cards, automobiles and mortgages. 

Rates flattened for the week returning to a familiar pattern from last year of a dip early in the week and then a spike a bit later for Friday to Friday flat.  Bond markets were closed today for Good Friday so a lot of traders sold off yesterday in front of the long weekend.  FHA mortgages were the exception and we saw positive movement for FHA rates.

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conventional  4.75%                 FLAT

30 year conforming-jumbo 5.25%                     FLAT

30 year FHA    5.00%                                      Down  0.25%

Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

A quick Easter story for those still reading; my sister, brother and I were born in Tulsa, Oklahoma and spent our early childhoods there.  Our Mom loved to have us decorate eggs and ideally hide them in our yard outside if the crazy Spring weather was cooperating.  As you may be aware Tulsa has very hot summers.  I can remember one summer when we were playing fort or cowboys and Indians or some game and there was a horrible smell.  Naturally all the boys blamed the other for the rather ghastly smell.  Then we discovered an egg that had been rotting in the 100 plus degree Tulsa heat for several weeks.  Of course this led to a new Easter egg hunt and a couple of more rotten, but not quite as smelly, eggs were found.  Moral to the parents: count the number of eggs you hide and make sure the number of eggs found equals the number of eggs hidden.  If you need help Mr. Willett can do the math!

I hope everyone has a great Easter! 

Have a great weekend,

Dennis

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