Archive for October, 2011

The Government’s Refi Plan

It is important to realtors and the buying and selling public alike that there be some assistance to help homeowners.

The following is based on information from “A Guide to Administration’s New Mortgage-Refi Plan,” The Associated Press (Oct. 24, 2011) and “Refinancing Plan Won’t Help Housing Market Much,” CNNMoney (Oct. 24, 2011)

To read more about this subject:
Gov’t Officials Urge Banks to Help ‘Underwater’ Borrowers

The Ins and Outs of Obama’s New Mortgage Refi Plan

President Obama announced Monday a plan to ease eligibility rules for home owners who want to refinance to take advantage of ultra-low mortgage rates and lower their mortgage payments. The administration hopes that by broadening its requirements for the Home Affordable Program that about 1 million home owners will now be able to qualify.

Here are more details about the newly announced changes to the program:

What is HARP?
It’s a program started in 2009 that allows home owners to refinance their mortgages at lower rates without having to meet the typical requirement of having at least 20 percent of equity in their home to do so. Under current guidelines, many underwater borrowers have been ineligible for the program because their home values had to be no more than 25 percent below what they owed their lender. Also, some home owners were unable to afford the closing costs and appraisal fees to participate.

What’s changing?
Many of the extra fees to participate in the program have been waived, and home owners’ eligibility won’t be contingent on how far their home’s value has fallen.

Who’s eligible?
Home owners with loans backed by Fannie Mae or Freddie Mac can participate. (Home owners can visit: or to determine if their mortgage is owned by either).
Home owners must be current on their mortgage.
When will it take effect?
The changes could take effect by Dec. 1. HARP also is being extended through 2013 to allow more home owners the opportunity to qualify.

How successful will this be?
The administration hopes that by home owners being able to lower their monthly mortgage payments (with an average annual savings of $2,500 expected), they’ll be more likely to stay current on their mortgage and avoid foreclosure. Also, the administration hopes that it will then free up household money to start spending more on other things, which could provide an overall boost to the economy. However, the administration says it realizes that aiding the housing market requires much more than a refinancing plan.

“This is only one piece of a broader strategy to help the housing market,” says Housing Secretary Shaun Donovan. Donovan also notes federal efforts to help home owners who are delinquent on their mortgages and the unemployed.

Source: “A Guide to Administration’s New Mortgage-Refi Plan,” The Associated Press (Oct. 24, 2011) and “Refinancing Plan Won’t Help Housing Market Much,” CNNMoney (Oct. 24, 2011)

Read More:
Gov’t Officials Urge Banks to Help ‘Underwater’ Borrowers

Hallowe’en Tricksters and Outdoor Lightin

Thanks to Service Magic here is a great tip as we approach Hallowe’en and the tricksters who may be out and about

Another year, another Halloween costume.
If you’re worried about Halloween pranks or safety in general, outdoor lighting is an important part of your defense. Burglars don’t want to break into a house where they will be seen. Installing lights by every entrance to your home and putting in motion sensor lights will do the trick.

Security systems are another good option. Studies have shown that just having the sticker of the security company on your window lowers crime, so imagine what a system will do.

Check all your window locks. Usually they aren’t that sophisticated and we forget to keep them locked. Upgrading your window locks, or at least checking to make sure everything is secure, can add to your safety.

But on Halloween this year, why not use all your safety toys to wreak a little havoc of your own? We say when those teenage pranksters come to your darkened house, unleash all your outdoor lights and security sounds.

Just make sure to pick the teenagers and leave the little girl in the witch costume alone. Just cause she’s dressed as a witch doesn’t mean she can hang. Not that we have any experience with that.

Home Affordable Refinancing Program revamped to boost refis – A Reprint

The article below is a reprint

Home Affordable Refinancing Program revamped to boost refis

Lenders shielded from claims associated with original loan

By Inman News
Inman News™

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In an attempt to boost participation in the Obama administration’s mortgage refinance program, Fannie Mae and Freddie Mac will release lenders who sign off on a refinanced loan from some legal liabilities associated with the original loan.

Mortgage market analysts view the waiver of so-called seller servicer “representations and warrants” on Home Affordable Refinancing Program (HARP) loans as the most significant of a series of changes announced today by Fannie and Freddie’s regulator, the Federal Housing Finance Agency.

Fannie and Freddie will also lift the current 125 percent loan-to-value (LTV) cap on HARP refinancings, and sign off on refis without an appraisal if they have reliable automated valuation model (AVM) estimates for the property.

The new HARP guidelines also eliminate some risk-based fees if homeowners refinance into shorter-term mortgages that will get them out from negative equity situations more quickly.

A homeowner with a $200,0000 loan on a home worth only $160,000 would be able to pay their loan balance down to that level in 5 1/2 years by refinancing into a 20-year loan at 4.5 percent interest, FHFA said, compared to 10 years with a 30-year loan at the same rate.

The HARP program was originally designed to help “responsible” borrowers with little or no equity in their homes refinance without having to purchase additional private mortgage insurance.

Although the initial 105 percent LTV cap was raised to 125 percent just a few months after HARP’s February 2009 launch, lenders have been reluctant to refinance underwater borrowers and the program has fallen short of its original target of helping as many as 4 million homeowners refinance.

According to the latest numbers from FHFA, Fannie and Freddie had completed nearly 894,000 HARP refinancings through August, but only about 72,000 were mortgages with LTVs greater than 105 percent.

Data aggregator Lender Processing Services has estimated that 23 percent of an estimated 46 million homes whose owners are current on their mortgages — nearly 11 million homes — are underwater. LPS calculates that about 72 percent of homes in foreclosure have negative equity.

Only borrowers who are current on a mortgage sold to Fannie and Freddie before June 1, 2009 are eligible for the HARP program. Originally scheduled to phase out this year, FHFA said today the program will continue through the end of 2013.

In announcing the program changes, FHFA said it hoped to see HARP refinancings at least double from today’s level by the time the program winds down, which would equate to roughly 1 million refinancings.

Those refinancings would come at the expense of investors in the mortgage-backed securities (MBS) backed by the loans being refinanced. Because those investors include the Federal Reserve, Treasury and Fannie and Freddie themselves, taxpayers would share in that burden, which would be partially offset by a reduction in foreclosures.

Earlier this year the Congressional Budget Office estimated that a hypothetical program that produced 2.9 million refinancings could prevent 111,000 defaults, costing taxpayers $600 million and private investors $13 billion to $15 billion.

Dow Jones Newswires reported that prices for MBS issued by Fannie and Freddie fell today after investors were surprised by the extent of the changes to the HARP program.

The new policy “runs the risk of alienating the investors that provide the bulk of all credit to homeowners” Dow Jones reported, citing warnings earlier this month from the Mortgage Bankers Association that mortgage rates could go up if investors lose their enthusiasm for MBS. Bond prices and yields move in opposite directions, so reduced demand for MBS drives up mortgage rates.

MBA President and CEO David Stevens said in a statement today that the mortgage industry welcomes the changes to the HARP program. Lenders “are particularly gratified” by the decision to grant lenders relief from some representations and warranties in originating new HARP loans, he said.

While the changes “are not going to be a silver bullet to solve all the issues facing our housing market …  they will offer lenders another tool to help borrowers and hopefully help bring some stability to housing markets, particularly those most impacted by home-value declines,” Stevens said.

The “reps and warranties” that protect Fannie and Freddie from losses on defective loans usually show up “in the first few years of a mortgage and so the value of the reps and warrants decline over time,” FHFA said in justifying the new incentive.

“These are seasoned loans made to borrowers who have demonstrated a capacity and commitment to make good on their mortgage obligation through a period of severe economic stress and house price declines,” FHFA said.

On a conference call with reporters, FHFA acting director Edward DeMarco said lenders would still be liable to claims of mortgage fraud on the original loan.

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Get An Energy Audit – reprinted from The Boston Globe Magazine 10/23/2011

In case you don’t buy a Sunday paper, you may have missed this which is part of a larger article “Guide to Going Green” by Vanessa Parks:

MassSave, expanded under the state Green Communities Act of 2008, is an initiative sponsored by the state’s major utilities  (and funded by a surcharge on bills) to subsidize and encourage energy efficiency.  First, get a free home energy assessment, during which a Mass Save specialist will spend about 2 hours checking out your basement, your attic, and everything in between.  During the energy audit, Mass Save will install as many as two programmable thermostats for free.  It will also install free water-saving faucet aerators and showerheads, as well as compact flueorescent light bulbs.

The specialist then draws up a list of recommendations to improve energy efficiency in the home.  “We provide a before and after type of picture,” says NStar’s Stack.  Homeowners are left with a document that outlines the estimated energy savings of various improvements (some of them are eligible for an array of state incentives and rebates).  “Some people do it in steps,” Stack notes.  “They say, We’ll do the insulation this year and update our heating system next year.” To schedule an audit call 866-527-7283.

People living in any of the 41 Massachusetts cities and town with municipally owned electric companies – among them Braintree, Concord, Danvers, and Wellesley – have to be customers of a gas utility in order to qualify for a Mass Save audit.  If  you don’t quality, a good place to look for a reliable contractor is the Mass Save website (, where there’s also an impressive collection of information regarding energy efficiency.  The approved contractors make improvements recommended b Mass Save audits,but some can also be hired for an audit independent of the program.  A comprehensive audit of a single-family home can cost about $500.

“I like to think we give a more thorough investigation” than the standard Mass Save audit, says Matt Beaton of Beaton Construction, a Shrewsbury company that specializes in energy-efficient and sustainable construction.  Beaton, who is also a state representative, says his audits often pickup issues that are not necessarily energy-related, like moisture problems.

Weatherize It

After an energy audit is conducted by Mass Ave, homeowners are given a list of contractors participating in the organization’s weatherization program (the list is also available online).

“It’s all fixed pricing, so it doesn’t matter who you pick on that list,” says Christine McEachern of McEachern Insulation Inc in Braintree, one of the participating contractors. She does, however, suggest that you select a contractor certified by the Building Performance Institute because of its specialized training.

Under the Mass Save program, plugging any holes where heat can escape – known as “air sealing” – is free for qualifying homes (among other things, the attic has to be easlily accessible). Workers detect ad close off as many tiny gaps and crevices as possible, such as those found behind switch plates, with caulk, spray foam, or weatherstripping.

The program rebates 75% of the cost of the next step – adding cellulose or fiberglass insulation – up to a maximum of $2k.  Mass Save pays he rebate directly to the contractors, so homeowners only need to shell out the initial 25%cost (plus anything over the $2k maximum).  It’s tough to say how much insulation a typical house will require, but McEachern’s 2700 square foot Cape was a $3500 job.

New Home Heating Oil Law

There is a new law regarding homes with oil that to ensure that there is equipment installed to prevent leaks from tanks and fuel lines.  As taken from Bay State Realtor magazine dated September/October 2011:

The new law requires that by September 30, 2011 owners of one to four unit residences that are heated with oil must already have or will need to install an oil safety valve or an oil supply line with a protective sleeve on their heating equipment.  Installation of these devices must be performed by a licensed oil burner technician.  Technicians are employed by companies that deliver home heating oil, or they are self-employed.  It is important to note that heating oil systems installed on or after January 1, 19990 are most likely already in compliance because state fire codes implemented these requirements on new installations at that time.

For those who need to install this equipment, state officials estimate that the typical cost of installing either an oil safety valve or oil supply line with a protective sleeve ranges from $150 to $350 (including labor, parts, and local permit fees).  While it is an expense that is not insignificant, the costs to clean up a leak can be in the thousands of dollars.

It is important to homeowners to remember that this rule applies to all homeowners, regardless of whether they are selling their homes or not.  The Massachusetts Department of Environmental Protection 9DEP) has an excellent, easy-to-understand document that explains this new rule

Homes Sales up for 5th Straight Month – Per MAR

This is great news for those selling and buying homes – Read here for the latest from the Massachusetts Association of Realtors:

No rush to lock in record-low mortgage rates From Inman News

No rush to lock in record-low mortgage rates

Fannie Mae: Purchase-loan demand expected to double in next 2 years
By Inman News
Inman News™

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Rates on 30-year fixed-rate mortgages dropped below 4 percent this week for the first time in history amid increasing global economic concerns, Freddie Mac said in releasing its Primary Mortgage Market Survey.

A separate survey by the Mortgage Bankers Association suggested many homeowners and would-be homeowners are unwilling or unable to take advantage of record low rates, with demand for refinancings and purchase loans both falling last week.

Fannie Mae economists are projecting that mortgage rates will stay well below 5 percent through 2013, and that demand for purchase loans will more than double in the next two years.

Freddie Mac’s survey showed rates on 30-year fixed-rate mortgages averaged 3.94 percent with an average 0.8 point for the week ending Oct. 6, down from 4.01 percent last week and a 2011 high of 5.05 percent in February. Rates on 30-year fixed-rate mortgages have never been lower in Freddie Mac records dating to 1971.

Rates on 15-year fixed-rate mortgages averaged 3.26 percent with an average 0.8 point, down from 3.28 percent last week and a 2011 high of 4.29 percent in February. The 15-year fixed-rate loan, often used by homeowners to refinance, set a new low in records dating to 1991.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loan averaged 2.96 percent with an average 0.6 point, down from 3.02 percent last week and a 2011 high of 3.92 percent. That ties a low, in records dating to 2005, last seen in September.

Rates on one-year Treasury-indexed ARM loans averaged 2.95 percent with an average 0.5 point, up from 2.83 percent last week but down from a 2011 high of 3.4 percent in February. The one-year ARM hit a low in records dating back to 1984 of 2.81 percent during the week ending Sept. 15.

Freddie Mac chief economist Frank Nothaft said interest rates for one-year ARMs rose as the Fed began moving $400 billion currently invested in short-term government bonds into Treasurys with remaining maturities of six years to 30 years, which will help reduce upward pressure on long-term interest rates.

Under a plan dubbed “Operation Twist,” the Fed is also reinvesting principal payments on the $1 trillion the government holds in Fannie Mae and Freddie Mac mortgage-backed securities (MBS) and debt back into agency-backed MBS as those investments mature.

Nothaft noted that Federal Reserve Chairman Ben Bernanke testified before Congress this week that the recovery is close to “faltering” and stressed the need for lawmakers to act.

The Mortgage Bankers Association’s Weekly Mortgage Applications Survey showed demand for purchase loans fell a seasonally adjusted 0.8 percent during the week ending Sept. 30, and was down 12.1 percent from a year ago.

Requests to refinance were down 5.2 percent from the week before, but accounted for nearly eight out of 10 mortgage applications.

In a Sept. 19 forecast, economists at Fannie Mae projected that mortgage purchase loans will total just $394 billion this year, down 16 percent from last year and 33 percent from 2009.

Fannie Mae’s forecast calls for purchase-loan demand to more than double within two years, growing 66 percent next year to $654 billion, and surging again in 2013, to $853 billion.

The mortgage giant’s economists don’t see upward pressure on mortgage rates, projecting that 30-year fixed-rate loans will average 4.2 percent during the final quarter of 2011 and stay there for the first half of 2012.

Fannie Mae’s forecast then calls for a gradual rise in rates for 30-year fixed-rate loans, to 4.4 percent during the final three months of 2012 and an average of 4.6 percent during 2013.

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