This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Refinancing? Would Be Nice If it Weren't Impossible

I asked the mortgage banker at this big bank how to eliminate the FHA guarantee. The banker told me that I could not for another 24 months. At 60 months, I could eliminate the FHA guarantee and its cost, if the loan balance was 78% of the outstanding mortgage.

Their final response was that our current 4.5% mortgage rate was a very good rate even with the Freddie Mac rate at 3.67%. I said, not at 217 basis points above the 10-Year U.S. Treasury yield. I laughed and moved on.

New Wrinkles

In my preparation for this story Thursday, and with the Freddie Mac 30-Year fixed rate mortgage rate down to 3.56%, I called the banker again for a new quote. I asked if I qualified for the Freddie Mac rate, and of course the answer was no.

This banker told me that the Freddie Mac mortgage rate was only for purchases, not refinancings. To qualify you had to put 20% down, pay at least a point up front and have a credit score of 800 or better.




To make matters more frustrating the FHA refinancing rate was up to 4.25% from the 4% rate quoted on June 1. It was thus not economically feasible to refinance again.

To add to my frustration, I asked if I qualified for the FHA Home Affordable Modification. Not surprising, the answer was no again, as this program would only apply if my mortgage was owned by Fannie Mae or Freddie Mac.

As my experience shows it is next to impossible to get mortgage relief even with the 30-year fixed-rate mortgage at a record low 3.56%. As I was preparing there were two pieces in the mail touting that I was pre-qualified for the FHA Streamline program. One had a 3.50% rate, the other at 3.25%. When you read the fine print it said that the rate could be set higher after the closing. To the trash went this mail.

I have been suggesting that we need a simple mortgage modification program for all homeowners, funded by a Federal Reserve Facility that channeled funds to the FDIC for use by community banks to finance or re-finance mortgages at 100 basis points over the yield on the 10-year U.S. Treasury. With the yield on the 10-Year at 1.50% the 30-year fixed rate mortgage would be 2.50% with no strings attached.

If you are current on your current mortgage, you automatically qualify. At this rate, the woes of the housing market would end, and the economy would recover with many construction jobs created.



This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs