Baltimore Home Affordable Refinancing
How Lenders May Determine Home Values
We now know one of the details of the Making Home Affordable refinance plan that wasn’t clear yesterday.
Since refinancing is available to homeowners who owe between 80-105% of the current value of their home, a key component to determining who will qualify will be figuring out the home’s value.
The Making Home Affordable loan modification plan spelled out how lenders would determine the value of a home for underwriting purposes. They can either use Fannie Mae or Freddie Mac’s automated valuation model (a computer program that crunches comparable sales and other info and spits out the value of a home), a broker price opinion, or BPO (an estimate of probable selling price based on comps or other factors) or the lender’s own internal AVM (as long as the lender is federally regulated and their AVM has been reviewed by the government; many big institutions use their own AVMs).
Fannie Mae yesterday released some more details (only loans backed by either Fannie or Freddie are eligible for the refi). Starting in April, lenders and mortgage brokers will have the option of using Fannie’s Desktop Underwriter to process refinancing applications. The Desktop Underwriter is a tool that includes an AVM, as well as credit risk management tools. According to Fannie Mae’s Web site, the underwriter will tell the lender how accurate the valuation is, and if an appraisal is needed.
Fannie says that 1,600 lenders and 29,000 mortgage brokers use their underwriting software. It seems this will probably only apply to Fannie Mae-backed loans (I assume Freddie Mac has a similar process).
Like I said in yesterday’s post, checking the Zestimate and value range of your home on Zillow is a good starting point to see if you owe between 80-105% of the current value of your home.
Posted by Carlos Sagastume on March 7, 2009. Filed under HUD Homes.
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I hope the Making Home Affordable program works out and well. America needs help when it comes to foreclosure, so the program couldn’t be any more timely. If this works out, not only will many homes be saved–so will the credibility of the Obama administration.