Under Water By More Than 105%: Now What?
Many people in who are current on their mortgage payments and want to refinance their home have spoken with their lender about the Obama refinance — where they can be up to 105% “under water” and still get a Fannie Mae / Freddie Mac loan.
What they are finding out once their appraisal comes back is that they are actually “under water” by more than 105% — and now they are trying to decide what to do. Should they just keep making payments at their high interest rate? Should they stop making payments and try to get a loan modification? Should they try for a loan modification even though they are current?
All of these are good questions – and really, there is no easy answer. There for sure is not an answer that will fit everyone’s situation perfectly — each situation is different and individual.
There is a possibility — note the word possibility — that the guidelines on the Obama refinance will soon be expanded where you can be up to 125% upside down on your home and qualify for the Obama refinance.
It hasn’t been made official yet — but for many people who currently have been turned down by their lender and are trying to decide whether to:
- Just keep making their mortgage payments as normal
- Stop making payments and try to get a loan modification
- Try for a loan modification even though they are current
Now there is at least one more option on the table — wait and see if the Obama refinance guidelines get expanded.
According to Bloomberg:
Fannie Mae and Freddie Mac may get permission to begin refinancing mortgages with loan-to-value ratios above 105 percent as the Obama administration seeks to boost participation in its anti-foreclosure programs.
“We’re actively considering how to structure a program that makes sense over 105 percent,” Federal Housing Finance Agency Director James Lockhart said yesterday. He said a ratio of 125 percent “is a number” that’s on the table, though “not necessarily the number we’re going to end up with.”