Refinance with No Income Or Credit Verification And No Appraisal?

I talk to people everyday who are unable to refinance to take advantage of today's historically low interest rates.  One of the big reasons they can't do so is that the value of their house has gone down so much that they are now "under water" (they owe more on their house than it is currently worth).  Certainly no lender would agree to finance a loan for say $300,000 on a house that's appraised at only $250,000.  This is true even if the borrower/homeowner has good credit and enough income to make the payments.  

But a bill was introduced in the House of Representatives by Rep. Dennis Cardoza earlier this week to allow homeowners to refinance an existing government-backed loan (Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA) into a new 30 year fixed rate mortgage at the prevailing market interest rate (today it's around 4.3%) with NO income verification, NO credit check and NO appraisal! 

The rationale behind this is that millions of homeowners are struggling to make payments on their existing, higher rate loans but are unable to re-finance and will eventually lose their homes in foreclosure.  Others, though able to make their payments but frustrated by their higher interest rate loans and lower home values, will simply choose to walk away.  Since the government (taxpayers) stands to take a huge loss if that happens (Fannie, Freddie and the others own or back about 30 million mortgages), it's proposed that this would stem the tide by helping to keep people in their homes and add stability to home values.

And for those who are currently able to make their house payments but are unable to refinance or sell due to being underwater, many would spend their new found savings and further help stimulate the economy.  (Refinancing a $300,000 loan from 6.75% to 4.3% would yield a savings of more than $450 per month or $5400 per year).

Sounds to me like this plan has some merit.

Let me know your thoughts by posting in the comments section below.

Average Credit Scores Of Central Oregon Feeder Markets Among Highest In US

According to a study released by credit scoring company Experian, metropolitan areas from which many Central Oregon home buyers relocate have some of the highest average credit scores in the country.¹

Credit Scores May Hamper Housing Comeback - Real Time Economics - WSJ

Most of us know at least a few people who have experienced a financial hardship over the last couple of years. Even if the setback was only temporary, the resulting damage done to their credit scores often continues to haunt these folks, and obtaining credit has become a seemingly insurmountable problem for many of them. According to an analysis done by Zillow Mortgage Marketplace, nearly 1 in 3 Americans may be unable to qualify for a home loan because their credit scores are too low!

Fannie Mae Can't Sell Them Fast Enough!

Banks and other such institutions are the most highly motivated sellers you'll find in today's real estate market.  For a number of reasons, they don't want foreclosed properties on their books and will typically price them aggressively in order to attract a buyer as quickly as possible.  (Short sales are another story, but I'll get in to that in a later post).

But apparently Fannie Mae feels that low prices aren't enough; it is sweetening the pie even more by offering to pay up to 3.5% in closing cost assistance as an incentive to buy one of the houses it has foreclosed on!   And part of the money can even be put towards the purchase of a home warranty!

Good Things To Come?

Despite the downturn in closed sales over the last two months (which I attribute to sales being pulled forward due to the Homebuyer's Tax Credit), pending homes sales reached the highest level for any month this year, and the most since October 2009.

206 home sales were showing as "pending" at the end of August.  With roughly 825 houses currently listed for sale, the number of pending sales results in just 4 months of available inventory, the lowest amount in over 3 years!

While not all of the 206 pending sales will close, a large percentage will and this bodes well for the Bend real estate market.

Home Sales Pace Slows

My apologies for not having posted for sometime.  My father has been diagnosed with mesothelioma ("asbestos cancer") and I've been helping him seek and get treatment.  Many thanks to all of you who have offered your support, prayers and best wishes as we continue to battle.

After increasing for the last several months, the pace of home sales in Bend slowed for the second month in a row in August.  118 single family houses on one acre or less were reported sold last month, down from 141 in July and from 135 the same month a year ago.