Home > Avid Law Center, Foreclosure, Loan Restructuring > Obama Makes Mortgage Refis Easier and Cheaper to Obtain

Obama Makes Mortgage Refis Easier and Cheaper to Obtain

President Obama has announced that the Federal Housing Administration will lower mortgage insurance premiums for borrowers who refinance their loans under a new plan to improve the housing market.

Borrowers who refinance their existing FHA loans will pay an upfront insurance premium equal to 0.1%, the lowest allowable rate, of the mortgage amount, plus an annual fee of 0.55%. The new program is available to all borrowers who are current on their payments even if they owe more than their homes are worth, and loans that were issued before June 1, 2009 are eligible for the new fees – which equals to an estimated 2 to 3 million borrowers. CNNMoney.com reports that these cuts, which take effect April 9, could reduce mortgage payments for the typical FHA borrower by about a thousand dollars a year, according to the administration.

According to CNNMoney.com, “the new policy will also make it easier for the banks to refinance loans because it directs the FHA not to count the loans toward the lender’s “compare ratio.” That calculates the performance of loans issued by the lenders and compares it to the performance of other lenders.”

President Obama also announced also announced steps to provide relief to service members who were wrongfully foreclosed on.

CNNMoney.com reports:

“As part of the plan, mortgage lenders and servicers will be required to review the case of every service member who was foreclosed on since 2006. Any member of the military who wrongfully lost their home to foreclosure during that period will be repaid for their lost equity, plus interest. They will also receive a flat fee of $116,785.

Service members who were denied the opportunity to refinance at the 6% interest rate required under the Relief Act will also be refunded anything they were charged over the 6% rate, plus interest.

In addition, military members who bought their homes between July 1, 2006 and December 31, 2008 and were forced to sell them at a loss due to a permanent change in station may be compensated for the loss in their home’s value.”

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