Senators Barbara Boxer and Bob Menendez have reopened legislation to remove the barriers that limit responsible homeowners from refinancing with cheaper interest rates.
The Obama administration has expressed their plan to push for more Americans to be allowed to refinance their mortgages at affordable and lower rates; something that will is sure to create vigorous opposition in Congress.
Senators Barbara Boxer (of California) and Bob Menendez (of New Jersey) have reopened legislation to remove the limitations that prevent borrowers, of government loans, from benefitting for the lowest interest rates on refinancing mortgages.
The senators mentioned that the Responsible Homeowners Act of 2013 will serve as the foundation for improving the Home Affordable Refinance Program (HARP). This Act will eliminate appraisal costs, reduce upfront refinancing fees, and make sure that standards are kept consistent for every lender while providing equal admittance to all borrowers in refinancing options.
The legislation was not able to win the Congressional approval in 2012. According to Menendez, America needs to make necessary relief for hardworking and responsible homeowners who are already constantly struggling to stay current on their high interest loans; the senator knows that there are thousands of such individuals in New Jersey. Menendez further emphasizes that this must be done now while interest rates are still down and that it is time that Congress gives responsible homeowners a fair opportunity at refinancing.
Today, the Obama administration’s HARP program is allowing borrowers, from Fannie Mae and Freddie Mac, to refinance their mortgage loans even if they owe more than their initial, principal loan, as long as they can keep up with their payments. HARP is reported to have already helped at least 1.8 million homeowners, while keeping Wells Fargo, U.S. Bancorp, and JPMorgan Chase in good standing.
However, economic experts say that HARP needs to do more for the borrowers since interest rates can’t stay low forever and, of course, the real problem is that the program proves disadvantageous for bank lender competition. Any bank that wishes to compete with a client’s current lender will have to undergo tumultuous underwriting qualifications and face more risks because Freddie Mac or Fannie Mae can make them repurchase loans, in case the borrower cancels.
This structure only allows borrowers to refinance with their current lender, unable to find better rates from others. This also creates an opportunity for lenders to charge even more expensive rates. In fact, a study conducted, from Amherst Securities Group, discovered that HARP-back borrowers are paying at least half a percentage more in interest rates, compared to borrowers with different loans. Obviously, there is a need to restructure HARP in order to pave the way for a fair and free market, bank lending system, for both lenders and borrowers.
For more information, connect with me on Spoke.com.
Nursing-home operators have finally found relief in the Financial Housing Administration.
Nursing-home operators originally sought out private banks for loans due the relative immediacy with which they’re approved. Private banks were preferable to the FHA, which can often take twice the amount of time to approve a loan and the bureaucracy also has the liberty can add on various restrictions to the loan agreement. This an limit a nursing-home from expanding without approval if the FHA so chose.
Recently however, banks have been declining loans to nursing-home operators. Given America’s economic crisis and impending changes to the Medicare system, banks fear that nursing-homes are at risk for defaulting on their loans. This insecurity causes banks to be incredibly cautious with their loans, and seek out the facts about their borrowers.
For instance, there’s been increased competition for nursing-homes, given the recent developments of assisted living—essentially apartment homes for the elderly, but with more freedom. This may be part of the reason for the nursing-homes’ slight decline in occupants. However, this is not a sufficient enough decrease to warrant a fear of defaulting on a loan. Fortunately, the FHA is aware of this.
The FHA insures lenders against losses, and they can safely determine this based on a company’s tract record and credit. The FHA can sight risk factors, and that’s why approving the nursing-homes across the country is a very minimal, low risk expense. An FHA spokesperson stated that the nursing-home foreclosure rate is below 1%. Not only this, but the nursing-homes’ cumulative loan amount is a fraction of the cost of the FHA’s home loans it approves every year.
Most of the loans still come from the private banks; in truth, Walker & Dunlop posit that the FHA has only backed $14 billion of a $90 billion industry. The nursing-homes obtain a relatively small amount from the FHA, and this is all the more they’ve approved the nursing-homes; they are secure from defaulting.
Michael Vaughn, head of FHA health-care finance at Walker & Dunlop, said that this improvement guarantees that the nursing-homes will not have to pay above a 3% interest rate, and will allow their loan to mature in 35-40 years. This kind of security insures nursing-homes against in a time of economic crisis and shifting Medicare.
The FHA’s efforts to implement changes in its policies have been warmly commended by Senator Bob Corker, who was the initial supporter of the changes.
Significant changes are taking place at the FHA to increase revenue, insurance, and efficiency. Senator Bob Corker has been credited as the one who initially suggested the change. His influence was crucial to the changes since, the FHA experienced significant losses in 2012 due to their automatic cancellation policies, which cancels any borrower’s balance once it reaches 78%. Their problematic reverse mortgage policies were the source of the loss of revenue, but of course, this isn’t the only change. The FHA is comprising a complete overhaul of underwriting procedures. This will foster a better mutual mortgage fund, as well as analyze the various risks involved with much more scrutiny.
For the whole article, visit AliFarahpour.tumblr.com