Obama Gives Bank of America a Hand: Analyst
22.05.12
, The administration-sponsored mortgage giants that were place under government conservatorship in September 2008. The Off-white House has pushed for the regulator to expand its Home Affordable
Refinance Program , or HARP, so that borrowers with mortgages held by Fannie and Freddie -- representing unsympathetically half of all U.S residential mortgage
loans -- will be able to refinance their entire
loan balance at today's historically low rates, regardless of how much value the underlying cuttingly has lost since the loan was originated. Under HARP, borrowers are limited to refinancing up to 125% of a relaxed's current market value, but with millions of borrowers seeing values nip 50% or even more since taking out mortgage loans at the peak of the real estate crisis, even that handsome loan-to-value limit isn't enough. Early next year, the 125% loan-to-value limit will be lifted. The FHFA is set to set on Tuesday details on the expanded HARP, including underwriting requirements and emancipating of certain liabilities for the large loan servicers. The expanded HARP will also feature the consequence of of risk-based fees for borrowers who go with shorter terms for the refinanced loan. Not only will the borrowers protect on the fees if they go with a 15-year fixed mortgage loan rather than a 30-year term, they will have lower rates. Bank of America, for example, on Monday was offering a 30-year rigged rate of 4.25% with a fee, or "points," of 1.125% paid up front for a $200,000 mortgage loan refinancing, while the 15-year censure with the same points, was 3.625%.
Source: TheStreet.com