This week, I have spoken with dozens of people who have been asking me about President Obama’s plan where people who currently owe more than their house is worth can refinance.
The big unknowns (which details will soon be released) are “how far under-water can you be and still refinance” and “how exactly will the LTV be calculated?”
The whisper numbers regarding the plan are that it will allow people who owe up to 105% of their homes value to refinance. If the number really is 105%, I don’t think this will help all that many people here in Arizona because many people currently owe 120%-150% of their homes value.
But before we start talking about how much a “105% refinance” or an “Obama refinance” will help or not – my best suggestion is to wait and see. While we are waiting, I thought I would brainstorm a little on some possible options of how to arrive at the 105% value:
How To Get to 105% – Some Possible Options
Here are a few possible options of what could happen. Obviously – I have no idea what is going to happen, but here are a few possibilities:
- Design the program similar to the FHA streamline program where no appraisal is required to refinance your home. For anyone who is under water (no matter how much) this plan would seem to make the most sense.
- Use a standard automated appraisal tool to determine the value of the home.
- Use whatever the FHA approved appraiser arrived at regarding what the home is worth.
- Use the tax assessors value.
- Use a Zestimate.
- Change nothing – and allow senior underwriters to arrive at a value.
Next week should be a big week – assuming that announcements are made regarding the program as scheduled!
Phoenix Arizona Mortgage Rates February 27 2009
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