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Mortgage Refis Extended

Published: Wednesday, July 1, 2009 1:19 PM PDT


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For San Diego, one of the big sticking points on the federal homeowner-help refinancing program has been a restriction on how far underwater borrowers can be.

The plan announced in February was initially offered to homeowners whose mortgages were worth 105 percent of their homes' current value.

Now the option to refinance will be extended to homeowners who are even further underwater.

Today, HUD Secretary Shaun Donovan announced in Las Vegas that the plan will expand to include those 125 percent underwater on their mortgage but still current on their payments.

(More than 30 percent of all homeowners in San Diego County who have mortgages are underwater. Note: We're not talking about the loan modification, payment-reducing part of the federal Making Home Affordable program here, but the option to refinance the loans if you're underwater.)

There is a catch: The borrowers' loans must be owned or guaranteed by Fannie Mae and Freddie Mac. Both agencies have loan lookup programs (Fannie Mae and Freddie Mac) to determine whether you qualify. I'm checking to find out what other restrictions might apply to the refinancing program and I'll let you know what I hear.

I called a couple of people for their takes on the new restrictions.

"That's good, that'll help a lot of people in San Diego -- that makes a lot of sense," said Mark Goldman, a local mortgage broker and SDSU real estate professor. "If somebody is upside-down, and can't refinance, they're more likely to walk away from their house."

Gary Laturno, a local real estate attorney and recent host of our Savvy & Sage series, said he'd heard many criticisms that the 105 percent guideline didn't do enough. "This will certainly make a lot more refis possible," Laturno said.

Here's more on the plan, from the HUD press release:

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. In just a few months, more than 200,000 borrowers have received offers for trial loan modifications, tens of thousands of refinances and trial modifications are under way, and informational mailings about the program have been sent to more than one million borrowers who may be eligible.


What do you think of the expanded program? Leave a comment below (if you're not in Survival, head over there to share your thoughts).

-- KELLY BENNETT




10 Comments so far on this story...

My goodness, isn't that a bid like taking out a bigger loan on your SUV so they don't repossess it, and thinking that it makes the car more desirable to own. Wouldn't you be better to dump the car, take a loss, and buy a new car for less money? Some how or another you think that the SUV will go up 33% so that when you sell the SUV you will break even so that you can say so didn't lose the SUV for not paying your bills. Switching back to house payments., You owe $200,000 on your home, it is worth today,$160,000, but you can refinance it for $200,000, extend the loan, for whatever, and at the end of the transaction, you are still, no matter how you cut it, $40,000 in the hole. Jack

Posted by Jack Osborne | reply to this comment
July 1, 2009 12:54 pm

People who continue to make payments on underwater mortgages and just want to refi them at lower rates despite all the measures government has taken to try to "help" them modify their loans or just walk away from them with reduced consequences to their tax liability and/or credit belong to a dwindling portion of the population who view their signature on a mortgage as a commitment to be fulfilled. We can either view the $200,000 borrowers of the $160,000 houses as $40,000 suckers or as people whose personal honor and integrity are worth more to them than $40,000, and which view we choose probably says more about us than it does about them.

Posted by GeneK | reply to this comment
July 2, 2009 7:50 am

There are still a few people left who see a loan as a commitment. They borrowed $200,000, and even if their house is now only worth $160,000 they're going to keep making the payments on that $200,000 because they signed their names on a contract and that means something to them. Some people may call them suckers because their honor is worth $40,000 to them, but if they've already proven that they can be relied on to repay that underwater loan, why not let them refi?

Posted by GeneK | reply to this comment
July 1, 2009 3:07 pm

Let's see, if an average San Diego homeowner is 125% underwater, that means they're house is worth at least six-figures less than they owe. Allowing this poor sap to keep throwing good money after bad, that's doing a favor? C'mon, the only ones benefiting from this ruse are the banks, the neighbors, and the Obama regime that's trying to hide how bad things are.

Posted by Jon | reply to this comment
July 1, 2009 3:24 pm

Mr. President why are the banking,and loan company not making loans as you promised they would do for the american people we are all hurting and not getting any help. Time for them to answer to you for not helping us the little people that keep them in business, maybe we should boycott their business. Check link

Posted by martindendy | reply to this comment
July 2, 2009 12:33 am

It is estimated that Obama's plan could benefit 8 to 9 million homeowners from the new modification procedures. So how do you know you qualify for the Mortgage Modification? Check the website

Posted by howardamin | reply to this comment
July 2, 2009 9:47 pm

Mr. President why are the banking,and loan company not making loans as you promised they would do for the american people we are all hurting and not getting any help. Time for them to answer to you for not helping us the little people that keep them in business, maybe we should boycott their business. Check link

Posted by pearlstarr | reply to this comment
July 3, 2009 7:42 pm

This whole stimulus package is just part of the governments long term plan to take away the power of the people. Are we going to do something about it or be lazy and think someone else is going to do it for us? It is time for a revolution. We need to overthrow the government and take our power back. Before there is nothing we can do about it.. you should check link

Posted by pearlstarr | reply to this comment
July 4, 2009 1:53 am

If anyone has had any luck with any of these companies, could you please post it for the ones that cannot find one to work with you. We've almost lost once and just got a second chance that want last long so I need to get something done now, so if anyone knows the right number to call, i am sure a lot of people that hasn't found them would appreciate it but check out link 2

Posted by allenbarela | reply to this comment
July 6, 2009 8:18 pm

If anyone has had any luck with any of these companies, could you please post it for the ones that cannot find one to work with you. We've almost lost once and just got a second chance that want last long so I need to get something done now, so if anyone knows the right number to call, i am sure a lot of people that hasn't found them would appreciate it but check out link or obamamortgage2009.bl

Posted by loispoor | reply to this comment
July 8, 2009 2:35 am


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