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The Chrisman Report

The Chrisman Report

As the U.S. economy continues to bump along toward year-end, there are plenty of suggestions on how to repair it. And many of those involve the housing and mortgage market, especially with the recent HARP refinancing news. If politicians in Washington could ever put their differences aside, there are some very useful things that might help.

For example, there are roughly 15 million homeowners who are under water with their mortgages. Perhaps the government should consider giving homeowners who are current on their mortgages permission to refinance, regardless of their credit score. They have shown a desire to uphold their side of the mortgage contractual agreement, which is secured by real estate. And if this is the case, do investors need to obtain an appraisal of the house, or verify income?

Another idea focuses on the large number of distressed mortgages backed by Fannie, Freddie, and the FHA. These enterprises typically acquire distressed homes at the end of the foreclosure process, often after the previous homeowner is no longer in the property, leading to maintenance issues and a lower eventual sales price. Recently, however, in a pilot program the FHA has sold the failing mortgages to private investors before foreclosure, and in turn the investor can opt to help the homeowner, perhaps by arranging a short sale, a principal reduction, refinancing to lower rates, or deeds in lieu of sale with the option for the current occupant to remain in the home as a renter.

There are other ideas floating around, such as granting visas to immigrants who buy U.S. homes, allowing Fannie & Freddie to allow loans to investors with more than ten properties, allowing people to use part of their retirement plans for down payments, and so on. We at US Mortgage applaud any efforts to help borrowers put housing back on the right track.