Good news for Las Vegas Real Estate! The Obama Administration is strengthening the mortgage refinancing program by allowing borrowers that have been hard hit by falling home prices to utilize the program.
The Federal Government is increasing the percentage from 105% of the value of a home up to 125%, augmenting the foreclosure prevention plan announced in February of this year.
We believe this program adjustment will have a very positive impact on Las Vegas Real Estate, as approximately 65% of our homeowners owe more than their home is worth at present.
Slow Traction for Foreclosure Prevention Program
Apparently, only 20,000 loans have been refinanced to date, according to the Treasury Department, which is just a drop in the bucket. The Mortgage Bankers Association last week slashed its 2009 forecast of originations because fewer refinancings were being done than they originally expected – only 13,000 were done in the three months after the plan’s launch. Clearly, this program needs more lift if it is to be successful.
No Changes in Baseline Criteria
Today’s expansion also means those with homes worth $200,000 and mortgages as large as $250,000 can still qualify. Previously, these borrowers could not have loans exceeding $210,00. Although homeowners must still meet existing criteria; i.e. be current on their payments, have loans that are owned or backed by Fannie Mae or Freddie Mac.
A second part of the program lets eligible borrowers who are in default or at risk lower their monthly payments to no more than 31% of their pre-tax income. This can help those who are not making as much at their jobs or who have monthly payments they can’t handle. Homeowners, servicers and mortgage investors can also receive incentives to entice them to participate in the program.
To summarize, we think this increase in the number of homeowneres that can apply for this program will be good for Las Vegas Real Estate and our industry as a whole. But, it will take several months to accurately gauge the impact.
