| More Risk for Fannie, Freddie?
Currently, FHA can't guarantee mortgages higher than $367,000. The plan, as outlined by Speaker Pelosi, also expands the role of FHA in assisting homeowners in trouble. In addition to raising the loan limits for FHA, Congress will permit more borrowers facing defaults to refinance through the FHA, and increase funding for housing counseling to $500 million to help home buyers who fall behind on their mortgage. Raising the loan limits should allow a larger pool of borrowers to qualify for lower-cost mortgages or to refinance existing mortgages, something that has been difficult to do since mortgage lenders pulled back from nonconforming loans. "This, along with the fact that interest rates have dropped, will give a big kick to the demand side of the housing market," said Nariman Behravesh, chief economist at Global Insight, an economic consulting firm in Lexington, Mass.
Australia will cope with sub-prime fallout: Swan
TREASURER Wayne Swan says Australia remains well placed to deal with the global economic fallout from the US sub-prime housing market crisis. US President George W Bush overnight unveiled a wide-ranging mortgage relief package which he said could help up to 1.2 million distressed homeowners. The plan, brokered by US Treasury officials with major industry participants, aims to help struggling homeowners refinance sub-prime adjustable-rate loans or freeze the current interest rates for five years. The program was unveiled amid fears a rising tide of home loan defaults would lead to a surge in repossessions and have a cascading economic impact. Mr Swan said the US sub-prime housing market woes remained a concern for Australia, primarily because it was causing liquidity in global financial markets.
Home equity loan avoids fees of refinancing mortgage
Q. I would like to refinance my adjustable-rate mortgage to lock in one of today's low rates. But I don't want to pay a lot of fees for a new mortgage that would actually make my monthly payments bigger over the next year. Refinancing would cost thousands, which seems like an awful lot for a loan of only about $80,000. What should I do? A. You might consider a home equity loan instead of an ordinary mortgage. Many home equity loans are unusually attractive now. Yours is a dilemma that confronts many homeowners with adjustable mortgages, or ARMs: They may be happy with the low interest rates they're paying today - in many cases only 4 percent or so - but they worry their rates will rise in the future. It would be nice to lock into a low fixed rate, but refinancing fees can total thousands.
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