Refinancing Requests Surge after Obama Announces Housing Plan
By: Amy Bohutinsky, Zillow VP of Communications | February 19, 2009
Yesterday, President Obama announced his housing plan which, in part, aims to help homeowners who are current on their mortgage payments to take advantage of some of new lower mortgage rates. As soon as the plan was announced, we saw traffic surge on Zillow Mortgage Marketplace. By the end of the day, consumer loan requests had spiked 56% over the daily February average, with more than half of these requests for refinance quotes.
But there’s been a lot of confusion over exactly who will qualify. The efforts are aimed at helping “responsible homeowners” who are making payments but can’t currently get a refi because they don’t have at least 20% equity in their home.
Specifically to qualify, a homeowner must:
- Owe between 80-105% of their mortgage. An analysis today of Zillow Q4 Real Estate Market Reports shows that 26% of mortgage holders, or 14.8 million homeowners, currently qualify to refinance under these specifications. One quarter (24.6%) of homeowners with mortgages (14 million) do not qualify because they are underwater and owe more than 105% of their home’s value. This is especially true in hard-hit areas of California or Florida, where home values have fallen 40% or more since the peak.
- Have their loans backed by Fannie Mae or Freddie Mac. Approximately 60% of single-family loans are backed by Fannie or Freddie, but a homeowner may not know this about their own loan. If you don’t know, call your lender and ask.
- Have a conforming loan. That means a loan under $417,000 in many areas — or up to $625,500 in high-cost areas like San Francisco, Boston or Washington, DC. Even still, the Zillow Home Value Index (median home value) for the city of San Francisco is $724,244, which says that lots of people have loans higher than the conforming limit.
More details are coming when the full plan is rolled out on March 4. Meanwhile, CNNMoney has a good overview of who will qualify for this part of the plan, as well as the plan’s second part — which tackles mortgage modification for borrowers who have fallen behind in payments or are at risk of doing so.
At this point, contact your lender so you can begin laying the groundwork for what to do once March 4 rolls around. Start learning and educating yourself. Ask questions about refinancing in Zillow Advice.
Here is some suggested reading:
- Stumble it!
- Categories: Foreclosures, Mortgages
Comments
32 Comments so far
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debra long on February 19, 2009 2:25 pm
what about us in the middle of the criteria of the qualifications. we are current on our payments but everything else and I do mean every other monthly payment is falling behind. we need a solution to the problem. we are not going to be able to afford more taxes and be able to live. Just think if we all give in, we all become unemployed and on welfare or unemployment then next is we all become homeless…. what is the answer….
very concerned about my families future.
Michaela on February 19, 2009 9:06 pm
This is bull…
I placed 20% down on my home. I tried to receive a lower rate and was told, sorry.. no go!
Self employed people cannot do this, people with other companies than Fannie Mae cannot do this… The actual people who placed down a proper down payment and could afford the payments are screwed!
Its a scam!!!!!! We need to kick them all out of goverment. checkout infowars.com
chris on February 19, 2009 9:21 pm
Isn’t great that people who screwed up get bailed out with the tax payer’s money? Don’t you feel great knowing you are helping those less fortunate? You know, SPREADING THE WEALTH. You’ll have to sell your Mercedes and get a Chevy, but your neighbor can now get rid of the Hyundia and get a Chevy too.
At least I can say I didn’t vote for this crap.
We need a REDNECK in the whitehouse.
Sam on February 19, 2009 11:42 pm
Amy,
You seem to be wrong in interpreting the plan. If this plan is only supposed to help those that have LTV of 80%-105% then most of the distressed owners from AZ who are the real candidates for the “foreclosures” or “walk aways” will be excluded since their LTV is in the range of 130 -140%. Additionally I do not think that the aforementioned group is in any dire threat of foreclosing unless they are the ones who did not pay any down payment. I do not think this was the intent of President Obama’s administration. Else he would not have chosen to come to AZ to unviel his plan. Please make sure that you completely research the plan correctly.
I think this is a very good plan since even “underwater” loans have a recourse for principal modification as the lenders/servicers are being incentivised for getting the modifications done.
Brandon on February 20, 2009 9:27 am
Great explanation of who qualifies. I’ve forwarded this post to some of my real estate clients in the Washington, DC, area.
What is a Loan Modification and Who Qualifies for One? | Zillow® Blog on February 20, 2009 12:53 pm
[...] wrote a post about step one in President Obama’s housing plan, which is to get responsible, qualified homeowners to refinance to a lower rate. Today, this post will deal with step two of Obama’s plan: loan [...]
Amy B (from Zillow) on February 20, 2009 1:56 pm
Sam,
My post above refers to Part 1 of the plan, which aims to help homeowners who are current with payments, but owe between 80-105% of their home’s current value.
Part 2 of the plan is chronicled in today’s blog post by Diane Tuman, and aims to help those who can no longer afford their monthly payments by modifying terms of their loans: http://tinyurl.com/audyac
However, one criticism of the plan is that it does not help homeowners who CAN currently meet their their monthly mortgage payment BUT ALSO owe more than 105% of their home’s value. You are right in that there are large numbers of people in this underwater situation in areas like Phoenix, where home values have fallen 38% since the market’s peak in 2006.
Liz on February 20, 2009 5:42 pm
I purchased my home for $530,000 in August of 2007 in Southern California. It is now worth $400,000. I am current on my payments and am not close to defaulting. I hate that I’m paying into nothing. Since my home value has plummeted in value by so much, I don’t think I qualify under this plan.
Terrence on February 20, 2009 5:58 pm
Thanks for the info. My clients are all asking questions about the plan. What will the rates be?
David on February 20, 2009 10:28 pm
It’s a hard pill to swallow, but do not believe that you deserve help just because you own a home. I’d love to pay less, but there’s no reason that I should. If our tax dollars need to be used, then they should be used to refinance/renegotiate mortgages that are unlikely to be paid back under current terms, but likely to be repaid if modified. I’d consider these to be loans where the principal remains the same, but the interest rate can be reduced so the monthly payment is less than or equal to 30% of the gross household income.
Bob on February 21, 2009 9:13 am
Does anyone know, of the percentage of mortgages that are underwater, how many are due to homeowners having pulled equity out of their home via equity loans. In the last several years, I witnessed many neighbors refinancing and living well beyond their means. I assume the government can track this and nullify these homeowners from any rescue plan? Can anyone help with this?
Thanks
Amy B (from Zillow) on February 21, 2009 9:23 am
Bob - I don’t know the percentage, but this refinancing help only applies to the first loan on a home.
Bob on February 21, 2009 10:11 am
Thanks Amy B,
I understand that the rescue plan only applies to the first mortgage, but are homeowners who refinanced and took on a subsequently larger mortgage eligible for this? I have to wonder how many who had done this are now part of the underwater mess.
I keep hearing in the media that 10 million mortgages are either underwater or within 5% of being underwater because of falling home values. And all I hear is that it is because of loose lending practices that allowed people who could not afford a home the ability to buy one. But how many of these are a result of refi’s with subsequent higher debt that pushed their LTV into this category? Should be some way of looking at county deeds/records. I think this portion of the overall pie will be shocking.
I personally know of far too many S. Florida family members/freinds that refi’d, took money out, and purchased BMW’s, designer clothing, and travelled extensivley with this new found cash. Their homes are now underwater and they are looking at this rescue plan for help.
Don Jackson on February 21, 2009 4:06 pm
Can a homeowner who has an interest only loan, 85%, qualify for this program?
Johnny on February 21, 2009 4:06 pm
I’m behind in my mortgage and no one seem to be able to help me. They are still trying to get the back money and will not lower my payments. They can have this house and add it to there collection. I will be saying my money for something else.
So many foreclosure here in the area, that I can’t sell it. So I will just stay as long as I want and save and they can have it.
Bob on February 21, 2009 8:44 pm
I put 20% down on my house in 1999. I refinanced in 2003 for a 15 years at 4.75. I have scrimped and saved while others bought a house with no money down, no documentation, interest only loans, ARMS where they didn’t read the contracts, or refinanced to take equity out to live the good life. So we should now reward and protect this behavior? This is fundamentally what is wrong with this country. We have become a nation of whining spoiled children who wanted to have the it all now; didn’t learn to save and plan for their future and want daddy (Uncle Sam) to bail them out. This mess is a result of when greed meets stupidity. There was a lot of greed starting with foolish home buyers/owners exploited by greedy lenders, and ending with larcenous and sociopathic wall street barons. When will we learn?
Michelle on February 22, 2009 3:54 pm
What about the debt to income and FICO requirements for the refi? If it is the standard 30% debt to equity requirements, EVEN IF YOU ARE CURRENT and would like to refi, most won’t qualify. The strict 30% debt to income rules didn’t exist when I got my mortgage, and I am a schedule C anyway who writes a lot off.
Very, very disappointed in this plan. Almost nobody can refi with this.
Terry on February 23, 2009 10:03 am
Apparently Mr. Obama believes in class warfare, whereby only a certain class of people - irresponsible idiots - get 4% 40 yr loans. The rest of us can simply go to hell as far as he is concerned!
Carnival of Real Estate #130 – Shares Prospective on the Stimulus Bill and More | vFlyer Blog on February 23, 2009 11:56 am
[...] commentary. Wow. I would love to write this well one day. Amy Bohutinsky presents Refinancing Requests Surge after Obama Announces Housing Plan posted at Zillow [...]
Carnival of Real Estate #130 | Zillow® Blog on February 23, 2009 2:44 pm
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Mortgages Rates Stay Steady Despite Housing News | Zillow® Blog on February 24, 2009 4:50 pm
[...] heard that the new plan has increased optimism among many homeowners and is causing lots of people to apply for refis. I wonder if this is going to completely back-log the system? Many people were speculating that [...]
Dagmara Hill on February 25, 2009 9:26 am
Hi I am a little bit concerned with this plan. I purchased my home in 2007 for 258K$ with nothing down, and the payments are 2094$ a month, I recently not only was reduced to part time work but also have gotten divorce. Do I look like I qualify for this plan ? I do not want to lose it and I have put in an enormous amount of work into it so I do not want to let it go. Mind you I make about half of my mortgage payment and my ex helps me with it but cannot for much longer.
Thank you for any comments
RON on February 25, 2009 9:35 am
It seems that the Government is picking and chosing who to help.I bought me home in 2005 for 370k but it was not through FANNIE OR FREDDIE my home is now worth about 200K
Lorna on February 26, 2009 7:19 am
I understand everybodies concern about the plan but this is the only thing that will help my mom. My father passed away this past June and left my mom in a mess. They have always paid all thier bills and stayed curent. My Dad fell ill and the expenses were high, when he died, she was left with more debt than a 73 year old woman could handle. My Mom has gone back to work full time and is tying her best. This is a plan that will let her still make her payments and work full time. If not for this, she would have to walk away and foreclose.
get over it on February 27, 2009 9:40 pm
Get over it! My husband & I live outside our means, yes. Stupid, I know but not deliberate! The fact remains that we eat ramen noodles & hamburger helper so that we don’t have to live in the crime infested city; we have even sacrificed having children because we know we can’t provide a stable financial environment, let alone provide a furure for ourselves nor them. We have a small 401k that loses thousands monthly like everyone else, but what we DID DO was pay our mortgage on time! We cancelled all of the luxuries except for the internet, yes it is a luxury for those in question, and we made our sacrifices. We are among the working and working and working and working 55+ hrs/wk that didn’t even vote for this president but will be darn sure to take advantage of what he is offereing! Everyone that voted for this man wants immediate gratification as if now that he is in office, he will fix everything! hahahahahahahahah…shame on all those hom think it’s all Bush’s fault! Ask around…talk to your co-workers if you still have any and most of them will tell you that they didn’t even know what channel CNN was on until this election! Please! Give me a break! We all make choices! We CHOSE to not have 5 kids, not purchase a home with a no interest loan & not live in a slum! We did however CHOOSE to live a little for each other without children, put a little down on our dream house (only 2000 sq ft), and live in an are that I knew my neighboors and actually made an extra lap around the block on my way home to scope things out. We CHOSE to put our HOME first & pay our mortgage on time & you BETCHA we are going to BENEFIT from it! By the way, we both drive used cars, live check to check, and had a $6.00 roaster chicken with some $0.99 rice for dinner. GET A CLUE!!!
Prince William Homes on March 1, 2009 6:59 pm
The interesting thing is that for many they are just reaffirming debt they cannot pay. The homes appraise for a refi, but would never appraise for a sale! When persons realize they are still upside down they will continue to walk away.
Spanky on March 5, 2009 7:50 pm
First I have to say well said Bob. Second I have to say I am not in danger of losing my house because I wasn’t dumb enough to let unscrupulous lenders talk me into getting in over my head with a house I couldn’t afford with a variable interest rate loan, inspite of the attempts they made. Ameriquest was one company that used ridiculous pressure tactics and show up at your door onb Sunday. What infuriates me is that most people who are in trouble now (not all) here in Florida KNEW they were in over thier head, but they didn’t have enough will power or sense to stay within thier means. So, now I have to bail them out, BS. Who is going to bail me out. I owe 189k and my house is worth 110ish because I bought at the wrong time. I can afford my payment, but its going to take me forever to catch up. Really, I don’t want Uncle Sam to help me. I made a mistake and I will work through it. I recently looked for new houses to buy and rent the one I am in and several of the ones I wanted to see were short sales. So, what do the people living in a house rent free do, they tell the realtor that they can’t show the house. Live rent free and don’t allow the lender to sell the house to someone who CAN afford it because they weren’t financially irresponsible. For all of you using these tactics, SHAME ON YOU. YOU are financially irresponsible and its because of YOU and the dishonest lenders/wall street security peddlars this country is in dire straits. Did you relly think home values would continue to rise 8+% per year forever, while incomes stayed virtually the same. As Bob said above this situation is the result of greed meeting stupidity.
Ryan on March 15, 2009 7:15 am
This Government has been for themselves for a long time now. Was once created for the PEOPLE by the PEOPLE.
Deborah on April 21, 2009 3:25 pm
I did exactly what financial advisor Obama suggested. I applied for a refinance on a home I purchased in 2005 for $300,000 with $100,000 down at 6.8%. After paying $550 for an appraisal, I was told that my home is only worth $230,000 now. In order to qualify for the refi I would need to purchase mortgage insurance. So a refinance at 4.8%, with closing costs of almost $5000 would only save me $44 a month because of the additional cost of the mortgage insurance. Because I had to pay for the appraisal even though it really didn’t compute to get the refi, I cannot afford my mortgage payment this month.
It appears that the president just wants us to continue to support the institutions that got us into the mess to begin with and give them billions in bailout monies (our money).
If he wants to help us out he should force all current lenders to drop rates on existing loans to 4.5% without having to refinance.
Loan Modification Zoom on May 6, 2009 4:01 pm
Guys, if you do not qualify for the refinance option under Making Home Affordable, there is a hardship based modification option…
Niel on May 6, 2009 8:49 pm
My mortage servicer is Talyor Bean and Witaker and my mortage investor is Freddie mac. When I call my lender regarding the obama refinancing program, they keep saying that they have not received guidelines for the program and asked to check back in two weeks. I have called atleast 4 times to them.This is really frustrating.
To be eligible for the program, your first mortgage should be less 105% of house value(second mortgage is not considered in LTV), good credit,no missing payments, 1-4 unit house. If you are not paying PMI now, you will not have to pay PMI again on new mortgage. These are straightforward guidelines.
But I DON’T understand why they keep saying they didn’t get guidelines.
100% Mortgage on August 14, 2009 10:01 am
Excellent, lets have another surge so more people start to get jobs again.