Tag Archives: refinance

Bernanke may have tried to save $300 a month in failed refi

Interesting enough, Bernanke cannot use his speaking fees as income as the loan officer stated in the article. Because his speaking fees would be self-employment income or producing a 1099, he doesn’t have 2 years worth of speaking fees or freelance income to use for a loan.

According to Bloomberg News, former Federal Reserve chairman Ben Bernanke this week told a conference of economists in Chicago that he had trouble refinancing his mortgage. “I’m not making that up,” he is reported to have told Mark Zandi of Moody’s Analytics.

Bernanke’s financial disclosure form in 2011 lists one 30-year fixed 4.25% mortgage with George Mason Mortgage as his only liability, worth $671,200 for a Capitol Hill townhome. That works out to a payment of about $3,300 a month. Given that the current fixed rate for a 30 year mortgage at 4.19%, according to Freddie Mac, it makes likely that he may have been looking to adjust into a shorter-term mortgage, like a 10/1 jumbo ARM, which would save him about $300 a month, according to Bankrate.com.

So why is it so tough for perhaps for the man who was once the nation’s most powerful financial guru to get a refinance?

It could just come down to income.

While Bernanke had a verifiable salary of $199,700 while as Fed chairman in 2013, his new income might be much more difficult to qualify, even if it is much higher. Even with a reported $1 million book deal and a speaking appearance fee of $250,000, it’s the actual income on the books currently that is what counts. And the salary of a fellow at the Brookings Institute, where Bernanke actually is employed, is quite modest, just $35,000 to $50,000 a year, according to one well-placed source.

“A bank would see his speaking fee as that of a regular guy who gets a commission or a bonus that would have to be averaged over the past two years,” said Darren Ferlisi, a mortgage loan officer with Integrity Home Mortgage in Frederick, Maryland. “Unless it’s in the books with a minimum number of engagements, that number can’t be used,” Ferlisi said. In addition, Bernanke only left the Fed job at the end of January after an eight-year stint, so he doesn’t have two years-worth of freelance income to show to a bank, Ferlisi said.

You Know It’s a Tough Market When Ben Bernanke Can’t Refinance His Home

Ben S. Bernanke said the mortgage market is still so tight that he’s having a hard time refinancing his own home loan.

The former Federal Reserve chairman, speaking at a conference in Chicago, told moderator Mark Zandi of Moody’s Analytics Inc. — “just between the two of us” — that “I recently tried to refinance my mortgage and I was unsuccessful in doing so.”

When the audience laughed, Bernanke said, “I’m not making that up.”

“I think it’s entirely possible” that lenders “may have gone a little bit too far on mortgage credit conditions,” he said.

Bernanke, addressing a conference of the National Investment Center for Seniors Housing and Care in Chicago, said that the first-time homebuyer market is “not what it should be” as the economy in general strengthens.

Read on.

Bernanke’s income??— pulling down an estimated $250,000 per speech.

Scant Interest in F.H.A. Program

A government program aimed at helping “underwater” homeowners refinance into more-affordable, reduced-principal loans has captured only a sliver of the borrowers thought to be eligible in the four years since its introduction.

The Federal Housing Administration’s Refinance of Borrowers in Negative Equity Positions program, more commonly known as the F.H.A. Short Refi, enables borrowers who owe more than their homes are worth to refinance into an F.H.A. loan with a lower monthly payment.

But lender participation is voluntary. And only about 4,600 F.H.A. loans have been originated under the program, a far cry from the 500,000 to 1.5 million borrowers the Department of Housing and Urban Developmentestimated could be helped when it announced the program in 2010.

Beyond that, existing F.H.A. loans are not eligible for the Short Refi program. So that leaves a much smaller pool of eligible borrowers whose loans are not backed by the F.H.A. or one of the government-sponsored agencies, but are likely more exotic.

“Most of the loans we do start out as some sort of interest-only, option ARM or one of the other esoteric products that were popular before the crash,” said Brian Faux, the chief operating officer of 1st Alliance Lending in East Hartford, Conn., one of the largest F.H.A. Short Refi lenders.

Read on.

Investors Reject Government Refi Idea Proposal

CNBC reports:

 

Under the proposal eligible borrowers must be severely underwater, with a loan to value ratio of 125 percent or higher and must be current with their payment. These borrowers would be given current market interest rates, replacing the 6 percent rates they’ve been unable to refinance out of (because they don’t have any equity in the home) and giving them a lower overall monthly payment. The Treasury Department, probably with leftover TARP funds, would pay investors the difference between the old interest rate and the new for five years.But the American Securitization Forum, which represents investors in residential mortgage backed securities, is balking at the idea, arguing that while underwater borrowers are at greater risk for default it’s not clear reducing their monthly payment will change that. It figures $120 billion worth of loan principal would qualify. Taxpayers would kick in $11.5 billion to make up for the reduced interest payments for the first five years and investors would subsequently lose $9.7 billion for the following years.

“The key question from the policy side for both investors and taxpayers is would providing this reduction in monthly interest payments provide any benefit either to the investors or to the public at large by reducing foreclosures? Our answer is we don’t think it will appreciably reduce people walking away from their homes,” said Tom Deutsch, executive director of ASF.

From its record, it seems unlikely that the Obama Administration would heed investors’ concerns. On a side note: taxpayers would be on the hook for almost $12 billion over the next five years. But, who would benefit? Not the investors but the government which is why investors are miffed at this proposal.