Last week, Federal and State officials, and five of the nation’s largest home lenders announced a $25 billion settlement aimed at helping struggling homeowners and stabilizing the housing market. The deal marks a settlement for charges that the banks executed improper foreclosures, and aims to help homeowners by helping them reduce their principal and/or refinance.
The plan will attempt to extend help offered for underwater homeowners. The Home Affordable Refinance Programs (I and II) aimed to expand refinance eligibility (by eliminating Loan-to-Value restrictions), but it was limited to homes backed by Freddie Mac and Fannie Mae. This new program will again expand availability of refinance beyond loans backed by such Government sponsored entities (GSEs).
For recent homeowners, the plan has three key components: principal reduction, refinancing and foreclosure payments. It will target as many as 1 million homeowners for an average of $20,000 per borrower in principal reduction and 750,000 underwater homeowners to refinance to lower interest rates. The plan also will give homeowners who had their homes foreclosed upon between January 1, 2008 and December 31, 2011 up to $2,000 each.
For a more complete rundown, including complete allocations of dollars and our commentary on its effect, see our article on our website HERE.
Interest rate costs have improved over the past week, and we are now at the lows we saw two weeks ago. With the cheaper cost, we are advertising 3.375 percent (3.582 percent APR) for the 30-year fixed and 2.875 percent (3.187 percent APR) for the 15-year fixed.
Last week we saw a bit of choppy behavior on the market, largely based on the continuing roller coaster of the Greek Debt issue. Today, the Dow finished at 12,874.04 and the S&P 500 finished at 1351.77.