“Free advice is well worth the price.” Keep that in mind the next time you ask someone in Secondary Marketing if you should lock today or wait.
Freddie Mac announced a change to their condo policy for loans with application dates on or after February 1. Companies who sell to Freddie “may only use FHA condominium project approval to determine the eligibility of FHA and certain other federally guaranteed or insured condominium unit mortgages for sale to Freddie Mac. Conventional conforming condominium unit mortgages in FHA-approved condominium projects may still be eligible for sale to Freddie Mac provided the condominium project meets our requirements.” Freddie goes on to remind their customers that borrowers with Freddie Mac-owned mortgages in all condominium projects are eligible for their Streamlined Refinance Mortgage and Relief Refinance Mortgage – Same Servicer. For the entire memo, one can visit http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1002.pdf
How far can an appraisal management company go toward originating mortgages? We may find out shortly. It is well know that many large companies such as Wells and BofA have interests in AVM’s but recently a story has made the press about an appraisal company getting involved in mortgage banking. Is it a possible conflict of interest? Stay tuned.
Markets don’t like uncertainty, and a little of that was removed yesterday as Federal Reserve Chairman Ben Bernanke was approved by the Senate for a second four-year term by a 70-30 vote. Supporters admitted that that the Federal Reserve under Bernanke had missed signs leading up to the recent economic crisis, but argued that under Bernanke’s leadership the Fed had helped steer the U.S. economy away from utter catastrophe. But no one wants to switch horses in midstream, even if there could be found a “new horse” that was qualified.
Overall, how have the programs designed to stop mass foreclosures been working? Not so well, and for a variety of reasons. Servicers often don’t have the ability to do renegotiations in bulk, and sometimes make more money by dragging their feet. Loans being placed into securities, which are then sliced and diced, make things more complicated, and borrowers usually are not even sure if they’re eligible. We should all keep in mind, according to a recent paper by the Boston Fed, that foreclosing is often more profitable than renegotiating. Almost a third of delinquent borrowers “self cure”. And of those who have their mortgages modified, more than a third end up defaulting eventually anyway. So in both cases, modifications make the servicer worse off. The housing bubble was very expensive – it will be surprising if we can deal with its consequences on the cheap.