In this week’s episode, Brian and David talk Fannie and Freddie’s future fees, total late payments and forbearances, and discuss why 19.9% down is sometimes better than 20.
This week’s highlights:
- Brian and David watch as Fannie and Freddie retract their surcharge
- Brian does the math on mortgage payments
- Brian walks David through the HomeReady maneuver
Scrapping the surcharge?
This week, Fannie and Freddie went back on their word and offered a bit of reprieve from their mortgage refinance penalty which was put in place to aid them in paying out ‘claims’ on subsequent job losses and forbearances due to the COVID-19 pandemic.
Instead of implementing a 05.% surcharge on refinanced homes beginning in September 2020, Fannie and Freddie’s servicers have rolled back their pricing penalty. Accunet can now, in turn, lower your closing costs or lower your rate. …That’s the good news.
The bad news is, the surcharge is not canceled, just delayed until December.
However, all things considered, Fannie and Freddie said they are going to exempt loan amounts under $125,000 (which are typically held by low to moderate-income families) and exempt HomeReady and Home Possible loans- both of which give better pricing for people who earn 80% or less of the area median income (in Milwaukee county, this would be just over $67,000).
Maxine Waters, the U.S. Financial Services Committee Chairwoman is up in arms, pointing out that the Federal Reserve is working very hard to cushion the economy, and questioning why Fannie and Freddie are insistent on raising rates?
If you’re looking to refinance, jump on it now, in the month of September! Accunet can help you lock in a better rate.
$4.8 billion dollars every 30 days
A number of major companies have announced or threatened layoffs this week, pushing for the government to make a move on assistance by October 1st.
MGM Corporation is laying off 18,000 people,
United and American Airlines are considering cutting 53,000 employees, and Coca Cola laid off 4,000, with the number of unemployment claims in America coming in at about 1 million per week.
So with so many people out of work, mortgage delinquencies and forbearances must be at a record high. How many Americans are not currently making their mortgage payment?
Black Knight Data Solutions released its official report on the number of Americans in forbearance:
Currently, 3.9 million people are in COVID-related forbearance out of 53 million mortgages in America, summing up to1 out of every 14 mortgage-holders are not making their payment under the CARES Act.
The total dollar amount of principal and interest to being paid on these mortgages equates to $4.8 billion dollars every 30 days (in case you were wondering why Fannie and Freddie may want to keep their surcharge…)
Pile onto that 3.9 million an additional 2.25 million loans that are ninety days or more past due (a different bucket of delinquent, not COVID related), and another 1.6 million loans are currently between 30 days and 89 days past due, totaling 7.95 million people, 1 out of 7 American households, or 15% of the homeowning population not currently making their mortgage payments.
Facing deliquency or forbearance?
Accunet has a clear policy on post-forbearance applications.
The ‘HomeReady Maneuver’
Lastly, Brian and David revisited the story of a couple who began searching for another home with poor credit scores but who were gifted a private mortgage and note by the husband’s father.
With this gift, they closed on a property in July, financed on the loan from the dad, and sold their existing home in August. Currently, Accunet is helping them refinance based on their new and improved credit scores.
The catch is, not every Fannie and Freddie servicer will operate off of a new credit score (stubbornly wanting to report the existing number); but the couple has 20% equity and they would have to pay $3,740 on their refinance.
Brian said that if they put just a little less money down (so 19.9%) and took advantage of Fannie Mae’s HomeReady Program, they would end up with a thin layer of mortgage insurance and better pricing.
Accunet can lower their loan cost by $2,100 by using what Brian called “the HomeReady maneuver”.
The couple will pay about $52/month more because of the mortgage insurance, but once that is paid off, Accunet will have saved them $1,300 overall.
Want to take advantage of this, or other magic mortgage maneuvers?
Contact one of our home loan experts today!
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