Get Prepared for the New Changes in Refinancing your Property’s Mortgage in 2018
Refinancing a mortgage isn’t always easy for homeowners especially with all the new laws that came into affect in 2018, the Local Records Office breaks down how to prepare for new changes
The effects of Obama’s mortgage plans have radically changed the way mortgage companies are setting up the new programs. And thankfully, these changes are really minor. Though, many are still unsure of whether buying a home is their next step, and because the ones looking to refinance through these mortgage programs were not outright accepted, through fallacies that fell short to help many homeowners, resulting in losing their homes and foreclosing, it is hard to believe mortgage companies are really here to help.
Obama Mortgage and Refinancing
This is the last year to take advantage of Obama’s mortgage programs. Here is a complete list of programs to help homeowners meet their mortgage payments and help modify their financing.
The Home Affordable Modification Program (HAMP) is a program for borrowers to lower monthly mortgage payments, “making them more affordable and sustainable for the long-term”.
The HAMP program ended last year and is no longer available for homeowners.
The Home Affordable Refinance Program (HARP) sometimes called the “Obama Refi” is for homeowners who are current on mortgage payments but “have had difficulty refinancing”. The official site explains that’s the borrowers who are “underwater” on their mortgages (owe more than the home currently is worth on the market), as long as the mortgage is owned by Fannie Mae or Freddie Mac, HARP could be of assistance.
The HARP refinance frequently was reported by consumers that the program appears to be “too good to be true” and that it “must be a scam”, however, it is real, and more than 200,000 U.S. households “in the money” to HARP-refinance right this minute.
Advantages of a HARP loan:
- Lowers your mortgage rate
- Shortens your loan term
- Transfers an adjustable-rate mortgage to a fixed-rate loan
- Bundles closing costs into a new loan
- Requires less paperwork than a traditional refinance, make the application process smoother
As the HARP program plans to end in 2018, more than 143,000 homeowners can still qualify, according to Federal Housing Finance Agency.
Home Affordable Foreclosure Alternatives (HAFA) “provides homeowners the opportunity to exit their homes and be relieved of their remaining mortgage debt through a short sale or a deed-in-lieu of foreclosure (DIL). It also provides homeowners with $10,000 in relocation assistance”.
As consumers were not so thrilled of these new programs to help troubled homeowners, Republican-led Washington has no plans of replacing it. So now it is up to the private sector to address this issue.
As banks and mortgage lenders say they are up for the challenge of offering their own foreclosure programs, housing advocates are still skeptical. As the mortgage industry was primarily responsible for HAMP’s shortcomings and the business has long been littered with errors, confusion and outright abuses. And as a result, the program fell short of the administration’s goals.
The mortgage industry is responsible for these programs falling short in helping homeowners
Banks and services routinely flouted the rules by rejecting eligible homeowners, and processing applications at a snail’s pace, to tossing people out who made their modified payments on time, according to the audit reports from the program’s watchdog, the office of the special inspector general for the Troubled Asset Relief Program.
Nearly 70 percent of those who applied for a loan modification was turned down. Leaving less than half the number, (1.6 million people) the program intended to help.
And nearly 14 million homes went into foreclosure, according to ATTOM Data Solutions, which tracks foreclosure filings.
Though the lenders say we have learned so much about how to make efforts work, “payment reduction, more than anything else, matters the most in making a modification successful,” said Wiseman of the Mortgage Bankers Association. “It sounds like the most obvious thing in the world, but it took us six years of data and research to get there.”
Things to know about the new programs
The industry’s newly recommended system emphasizes on payment reduction. It targets to drop at least 20% of the homeowner’s monthly bill “through a series of steps that include interest-rate reductions, adding years to the life of the loan and principal forbearance or forgiveness.”
The new programs to replace HARP at the end of 2018 also have stricter requirements and will be offered separately through Fannie Mae and Freddie Mac. They will be based on your loan-to-value LTV ratio.
- Fannie Mae’s program is called the High Loan-to-Value Refinance Option.
- Freddie Mac’s program is called the Enhance Relief Refinance.
A key requirement you must meet for these programs is your LTV must exceed 95% of your home. This is much higher than the 80% floor under the current program.
Eligible borrowers must have:
- A Fannie Mae or Freddie Mac mortgage that closed on Oct. 1, 2017, or thereafter.
- Current mortgage payments and no 30-day delinquencies in the last 6 months.
- Only one missed a payment in the previous 12 months.
And you must wait at least 15 months from when your loan was sold to Fannie Mae or Freddie Mac before you can refinance under the new program.