Remember those loans for 125% of the value of a home? That's what comes to mind with this from National Mortgage News (hat tip to broker Lou Pacific):
The 105% loan-to-value ratio limit on Fannie Mae and Freddie Mac's program to refinance underwater borrowers could be raised to increase participation, according to the GSEs' regulator. The Federal Housing Finance Agency is "looking at going significantly higher than 105%," FHFA director James Lockhart said. The 105% ceiling has kept too many borrowers on the sidelines, he told a National Association of Real Estate Editors conference. The GSEs have refinanced 80,000 homeowners under the special program that the Obama administration has promoted to help borrowers who can't qualify for a standard refinancing. The administration unveiled the refinancing program in February and estimated it will refinance at least 4 million homeowners who have loans that are owned or guaranteed by the government sponsored enterprises. The 105% LTV limit theoretically allows Fannie and Freddie to securitize the newly refinanced loans and sell them to the Federal Reserve and other investors. However, raising the LTV might force the GSEs to hold the loans on their books.
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Recently foreclosed homes, most of them likely being sold by lenders, are taking up a decreasing portion of Orange County real estate transactions, DataQuick's latest figures show. In May, homes that had been foreclosed upon in the previous 12 months made up 34.2% of homes sold, excluding newly built home sales, DataQuick reported. That's the lowest percentage since August. Foreclosure's share of the home resale market peaked in January at 46%.
Lenders repossessed more than 1,400 Orange County homes last August - the highest number of any month on record. The increase in re-sales of foreclosed homes followed, but began to subside in February. One reason is likely that foreclosures fell in September and subsequent months amid a state law requiring banks to talk to delinquent borrowers at least 30 days before filing a notice of default, which starts the foreclosure process. The law impacts loans made in the final years of the housing boom.
And some agents specializing in selling bank-owned homes have speculated that lenders are withholding a large number of foreclosures from the resale market, making it likely that many more foreclosed homes will show up later. (For more on foreclosure trends, click HERE or HERE.)
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