Pam Marron Home Lending

Clinton vs. Trump: Different visions for housing finance

July 30, 2016 by · Leave a Comment 

By Victor Whitman, Reprinted from the Scotsman Guide

Republicans and Democrats have approved party platforms with fundamentally different views on the role of government in housing and housing finance. As the presidential election shifts into high gear, we’ve looked at what both parties and the presidential candidates have to say about the future role of government in housing finance.


The Republican platform makes the case for cutting regulations and the government’s role in housing. The document sharply criticizes the sweeping financial reforms under Dodd-Frank, calling the 2010 law the Democrats “legislative Godzilla” that is “crushing small and community banks and other lenders.” It also singles out the consumer watchdog agency created by Dodd-Frank, the Consumer Financial Protection Bureau (CFPB). According to the Republican platform, the CFPB is “a rogue agency” that if “not abolished, it should be subjected to congressional appropriation.”

Republicans also directly blame the government-sponsored enterprises Fannie Mae and Freddie Mac for sparking the 2008 housing crisis.

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Payment Reductions Should Continue After HAMP Expires: Regulators

July 25, 2016 by · Leave a Comment 

By Brian Collins, from National Mortgage News
July 25, 2016

Federal regulators warned mortgage servicers Monday that they will still expect them to offer loan modifications to distressed homeowners even after the Home Affordable Modification Program expires at year-end.

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Democratic Platform Shifts from Post-Crisis Recovery to Housing Access

July 25, 2016 by · Leave a Comment 

By Bonnie Sinnock, from National Mortgage News
July 25, 2016

Democrats will adopt a party platform this week that omits most references to a need for continued post-housing crisis reforms, and instead focuses on expanding access to mortgage credit and support for industry regulation.

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Refinance Sought for Millions Trying to Remain in Underwater Homes

July 16, 2016 by · Leave a Comment 

Pete Smith, an underwater homeowner in Chicago, Ill., is frustrated by the only option available for homeowners who have negative equity on their second mortgage.

“I’ve tried to find a refinance option, a modification option, and the only advice that my lender has given me is to go delinquent,” said Smith. “They claim that as long as I pay on time, I have no option as far as a modification with them.”

This same response is heard again and again by homeowners with these three types of negative equity mortgages:

1. Portfolio conventional first mortgages (non-Fannie Mae and non-Freddie Mac)

2. Second mortgages

3. Home equity lines of credit (HELOCs)

A refinance is what many of these folks are looking for to stay put in underwater homes, where the mortgage is greater than the value of the home. Most are stunned to find that the only option available is not a refinance, but a modification that requires mortgage delinquency first and proof of hardship.

Affected homeowners with these three mortgages are either still living with initial, higher interest rates from years ago, or their loans may be interest-only and are now resetting to fully-amortized, higher payments. Underwater elderly homeowners on fixed incomes are most at-risk and struggle to pay the steep increase when the interest-only payment changes to a fully amortized payment.

The difference between a refinance and a modification
A refinance allows underwater mortgage holders to stay current on their payment and take advantage of today’s lower rates, enabling homeowners to stay put and avoid a short sale.

A modification requires mortgage delinquency, resulting in the inability to get future credit, prolonged time-frames in order to get a refinance or a new mortgage, and the possibility of erroneous foreclosure codes on their credit when delinquent mortgage payments go past 120 days late. If the underwater homeowner must ultimately short sell the home, they often pay higher rent due to damaged credit as a result of the required mortgage delinquency required to modify.

A modification also requires proof of hardship. Underwater homeowners seeking a refinance may not be experiencing a defined hardship and are most often told they cannot receive help unless they are delinquent on their mortgage.

How a refinance can be done
Putting two finance programs in place at the same time is key to how this refinance can be accomplished.

Using government entity funds as a new, replacement second mortgage; and combining these funds with five existing mortgages, can provide a refinance for second mortgages and HELOCs, and can accommodate a restructure of funds to allow an FHA Short Refinance to replace an underwater portfolio conventional first mortgage.

The combination of government entity funds with these mortgages allows for an unlimited combined loan-to-value (CLTV) of the first and secondary loans together, a replacement refinance of the secondary loans, and the availability of a new refinance for the portfolio conventional first mortgage.

These five existing first mortgage programs are:

1. Fannie Mae DU Refi-Plus Home Affordable Refinance Program (HARP): For negative equity Fannie Mae first mortgage. No maximum loan-to-value (LTV) or CLTV.

2. Freddie Mac Relief Refinance Open Access (HARP): For negative equity Freddie Mac first mortgage. No maximum LTV or CLTV.

3. FHA Short Refinance: Available for negative equity non-FHA mortgages, the new loan’s maximum LTV ratio is 97.75 percent of the current property value and the maximum CLTV is 115 percent of the current property value. However, there is no maximum CLTV ratio for second loans held by government entities or instrumentalities of government.

4. FHA Streamline Refinance: Available for negative equity FHA mortgages.

5. VA Interest Rate Reduction Refinance Loan (IRRRL): Available for negative equity VA mortgages.

Note: the USDA Refinance was also researched. Their correspondence directs the homeowner to the specific lender who is responsible for servicing their loan.

Strategic default concerns do not exist when underwater homeowners are trying to stay put in homes. A large number of the 6.4 million underwater homeowners that still exist throughout the U.S. have the three types of loans where no refinance exists. Most of these homeowners are simply trying to stay put in their home seeking a sustainable refinance option to better rates that does not require mortgage delinquency first.

Because there are still so many seeking sustainable payments and program expiration deadlines are looming, diligent effort is being made to work on solutions with current programs available … stay tuned.

Urgent Attention Needed. Two Problems and Solutions That Exist for Negative Equity Homeowners

July 12, 2016 by · Leave a Comment 

Let’s Work Together to Fix the Problems Now

Restructured and Refinanced: There is a way to use government entity funds as a new 2nd mortgage and combine these funds with six existing refinance programs to provide a refinance where none exists for millions of responsible, currently paying homeowners who have negative equity mortgages. The benefit? Credit stays intact, homeowners “stay put” in homes while equity escalates and communities recover.

There are over four million homeowners across the U.S. who are still trapped in their current location because they have no refinance option for a first mortgage, a second mortgage, or a Home Equity Line of Credit (HELOC). Over 454,000 of them live in Florida alone!

These are often people who are hanging on by a thread, but through no fault of their own, have no option for a refinance. Currently the only option available requires mortgage delinquency and proof of hardship to achieve a loan modification. We must provide solutions that do not destroy the credit of those with negative equity.

Unless we provide a solution, there will be another wave of defaulted mortgages. These are not people looking for a handout. They desperately want to keep their credit intact, but no option currently exists to let them do so. The solutions presented in this report simply restructure current debt with available programs to allow the homeowners to stay in their home while staying current on their mortgage.

Solutions to lift these homeowners out of negative equity are already available. We need to get our legislators and leaders on-board now because three of the options will expire in December, 2016.

Read the entire report! Click the link below to download and start reading now. Comments are welcome.

Urgent Attention Needed. Two Problems and Solutions That Exists for Negative Equity Homeowners

Post-Foreclosure Consumers Are Ready to Rejoin Economy

July 11, 2016 by · Leave a Comment 

From Bloomberg News, July 7, 2016

Millions of Americans lost their homes to foreclosures or short sales during the housing crisis. Fortunately for the economy, time heals most wounds — and credit reports.

The number of people joining the rolls of those knocked from homeownership peaked seven years ago, so those blotches to their histories are starting to roll off the books right about now. The resulting improvement in credit scores means more Americans will find themselves with the ability and means to once again apply for loans, and not just for home purchases.

“Improving credit scores might entice households to start borrowing more in general,” said Ralph McLaughlin, chief economist at real estate search engine Trulia. And what better time than now, when interest rates are so low.

That, combined with sustained gains in employment and bigger increases in pay, could give consumer spending, which accounts for almost 70% of the U.S. economy, an added lift over the next couple of years. The impact, though, is hard to quantify because it’s difficult to estimate how many people will once again be emboldened to borrow after experiencing such a shock, said Jacob Oubina, a senior U.S. economist at RBC Capital Markets in New York.

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