The White House, this week, announced the Homeowners Affordability and Stability Plan. An executive summary of the plan may be viewed on the White House web site.

President Obama’s plan for the housing market consists of three components:

• Refinancing for up to 4 to 5 million responsible home owners to make mortgage payments more affordable
• A $75 billion homeowner stability initiative to reach up to 3 to 4 million at-risk home owners
• Supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac

Today I want to address the first component of Obama’s plan. Understand that the final directives of this plan are to be announced on or around March 4^th. Specifics and changes to the plan are to be addressed then.

This writing expresses my views, opinions, agreements and concerns. You should not take these as facts because at this point in time we don’t have all the facts. Further details, again, are to be announced on or around March 4^th.

Part 1---Affordability: Provide low cost financing for responsible home owners to refinance.

This has been occurring prior to the announcement of this plan. Everyone in the mortgage lending industry is gleefully aware that we have been experiencing a refinance boom since mid December 2008. And the plan acknowledges this.

I wrote a post last month titled What The Fed Is The Treasury Department Doing discussing my opinion that the government wanted everyone that could possibly refinance to do so. So this component of the plan is not a surprise and has been in play for a few weeks.

What is interesting about the executive summary is that it specifically targets home owners that currently have conforming loans with Fannie Mae and Freddie Mac. This begs the question what if your current loan is not with Fannie Mae or Freddie Mac?

This part of the plan focuses on those home owners that current owe greater that 80% of the current value of the property up to as high as 105% of the current value. These are home owners that are not currently in default and they are paying their mortgage payments.

There are two premises stated for which I take issue:

• That this group is having a difficult time securing refinancing
• The program will provide the opportunity to refinance through the two institutions, Fannie Mae and Freddie Mac.

This group is having a difficult time refinancing?

The White House executive summary is declaring that if your loan to value is greater than 80% you are having a difficult time refinancing. This is a faulty premise!

I and other lenders are assisting customers like this every day now. There are programs available at today’s low rates. One of the examples uses in the President’s material is a borrower that would have a 90% loan to value for a refinance. It states they would be ineligible for Fannie Mae refinancing. I’m sorry this is just not true! This person can refinance and if they are using a conforming loan product it will require mortgage insurance. But it can be done.

One of the primary loan programs today for those with loan to value greater than 80% and less than or equal to 97.75% for a refinance, has been in existence since the 1930’s. This program is FHA.

So to say that a home owner can not take advantage of today’s low rates because they owe more than 80% of the value of the property is, in my opinion, factually inaccurate!

What I do agree with within the language of component 1, in the executive summary, is providing assistance for home owners with current loan to value between 97.75% and 105%. Component 2 does address those homeowners that have seen declines in value that place their current loan to value greater than 105%. I will be discussing that component in a later post. So stay tuned.

The program will provide the opportunity to refinance through the two institutions, Fannie Mae and Freddie Mac?

I really want to hear what this means. Does this mean that the borrower will go directly to Fannie Mae and Freddie Mac?

Does this mean that those of us that are loan officers directly dealing with the public everyday are going to have that source of business taken away from us?

Again, my opinion, what I read into this causes me concern. I can see a delivery system developed that retail mortgage loan officers working for direct lenders will not be able to participate. I can see a delivery system developed that will prevent loan officers working for correspondent lenders from participating. I can see a delivery system devised that will block mortgage brokers from entering this playing field. I can see a complete government takeover of the mortgage industry.

I hope I am wrong!!!

I do intend to address the other two components of the Homeowner Affordability and Stability Plan is subsequent posts.

I will also come back to this component as further details are made available.

In the mean time I am interested in your thoughts, praise or concerns with this program, at this time. A dialogue is in order. Our goal is and always has been to assist home owners. Let me know what you think.

Jay Williams

http://www.myhomeloanwithjay.com