Obama may soon make refinancing your Albuquerque home easier - Albuquerque Real Estate News - Q Realty® | Albuquerque Real Estate

Some great news coming out of Washington that may affect many Albuquerque home owners and Albuquerque real estate as a whole. We might actually be able to refinance our homes into better interest rates!

The Obama administration is considering further actions to strengthen the housing market, but the bar is high: plans must help a broad swath of homeowners, stimulate the economy and cost next to nothing.

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions who asked not to be identified because they were not allowed to talk about the information.

A wave of refinancing could be a strong stimulus to the economy, because it would lower consumers’ mortgage bills right away and allow them to spend elsewhere. But such a sweeping change could face opposition from the regulator who oversees Fannie Mae and Freddie Mac, and from investors in government-backed mortgage bonds.

Administration officials said on Wednesday that they were weighing a range of proposals, including changes to its previous refinancing programs to increase the number of homeowners taking part. They are also working on a home rental program that would try to shore up housing prices by preventing hundreds of thousands of foreclosed homes from flooding the market. That program is further along — the administration requested ideas for execution from the private sector earlier this month.

But refinancing could have far greater breadth, saving homeowners, by one estimate, $85 billion a year. Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.

Exactly how a refinancing plan might work is still under discussion. It is unclear, for example, whether people who are delinquent on their mortgages would be eligible or whether lenders would administer it. Federal officials have consistently overestimated the number of households that would be helped by their various housing assistance programs.

via cnbc.com

This is a fantastic start and some positive news. Let’s remain optimistic that this will go through. I am asked by my past Albuquerque Home Buyers on nearly a daily basis what they can do to refinance their home to get a lower interest rate. They’re not trying to sell, they’re not walking away from their home or attempting a short sale or foreclosure, but they are under water.

The under water part is what is precluding Albuquerque Home Owners from refinancing their high interest rate mortgages into something that is more affordable. They’re not asking for money back, they’re not asking for a reduction in principal balance, they’re not asking to switch lending institutions… All they’re asking for is an adjustment on their interest rates.

If the market were different and we had seen appreciation instead of depreciation, a homeowner would have no problem refinancing their homes to get a lower interest rate. Instead, we have seen significant depreciation (less in the Albuquerque real estate market, thankfully) and because of which, many homeowners are finding that they owe more on their homes than they are worth.

During a refinance, banks will typically appraise the home to make sure the home (which is collateral for the loan) is worth what the homeowner is borrowing. But because they owe more than the home is worth, they will not consider a refinance. I question where there logic is. The homeowner is not asking for more money than they already owe, they are being responsible homeowners and not walking away from their home or worse, and all they’re asking for is to receive the same interest rate as if they had purchased the home today.

If this were to pass, it would be monumental for homeowners, a huge stimulus to the economy, and the banks who are now rejecting refinances would benefit because fewer homes would go into default. It’s also worth noting that they already cary the loan, so they’re not coming out of pocket or having to throw good money after bad. They would simply reissue the same value as the current principal balance of the home loan, but at today’s interest rate? I don’t see why this has not been done sooner.

Next, Mr. Obama, please consider reforming bank’s behavior towards short sales. We desperately need new legislation passed that will speed up the short sale process, because the longer it takes, the lower the price will have to be to make the home marketable, and with so many short sales at ridiculously low prices, it is affecting traditional home sales, both directly and indirectly. If home buyers are gravitating towards short sales because their prices are ridiculously low, it is taking buyers away from regular sellers. Additionally, if the short sales are successfully closing for pennies on the dollar, it negatively impacts the values of entire communities.

If you are an Albuquerque home owner or just interested in Albuquerque real estate and would like more information on this topic, please contact me by filling out the box below.

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Obama may soon make refinancing your Albuquerque home easier – Albuquerque Real Estate News

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