HARP Program - Our Government's Next BIG Idea

This week, the Big 4 Mortgage Servicers/Investors (BofA, Citibank, Wells Fargo and Chase) release their varations of our governmment's
Making Home Affordable Program. The GSE's (Fannie Mae & Freddie Mac) have seperate versions of this program. Freddie Mac Relief Refinance MortgageSM and the Fannie Mae DU Refi PlusTM.

The concept behind these programs are to support potential borrowers who are under water on their home loans compared to their equity. Homeowners who might benefit from this action are the almost 50% of the homeowners who have loans secured by either GSE.

Some of the highlights are as follows:
Max LTV/CLTV -
105% LTV
Unlimited TLTV/CLTV

Loan Amount
Payoff of the first mortgage balance, including accrued interest
Actual closing costs, financing costs, pre-paids, and escrows
The borrowers may not receive any cash at closing
Note: No limit on closing costs, financing costs, pre-paids and escrows.
Example:
Payoff amount: $352,006
Actual closing costs, etc.: $3,672
Maximum loan amount: $355,678

I could go on but with most of the government's misguided programs, there's a kicker. Mortgage Insurance, which is required for the home loan where the Loan to Value is above 80% on the first mortgage would usually typify this potential client. Homeowners who are under water with the equity of their home loans usually had put down more than 20% (or took out a second). Either way, both GSE programs are currently not available for loans with MI; altough they may be offered at a later date.

So don't get too excited about the "latest" offering from our federal government.

This week's short economic calendar

Mon. April 6

Tue. April 7, 1:00 p.m. ET
Treasury sells $6 billion of
10-year inflation indexed securities
The “adjustable” feature of these securities should draw solid investor demand. If so, this will be a non-event in terms of its impact on the trend trajectory of fixed income interest rates.

Wed. April 8, 10:00 a.m. ET
Feb. Wholesale Inventories
-0.6% vs. last -0.9%
This old tidbit of macro-economic news will likely do nothing more than take up space on this week’s calendar.

Wed. April 8, 1:00 p.m. ET
Treasury sells estimated
$34 billion of three-year notes
The relative short-life of this security will likely result in a well bid offering. If so, this event will have little, if any impact on the direction of mortgage interest rates.

Wed. April 8, 2:00 p.m. ET
Minutes of the Federal Open Market Committee March meeting

Market participants will peruse this document for details surrounding committee members’ decision to commit $300 billion to the direct purchase of Treasury obligations as well as expanding their purchase of mortgage-backed securities by $750 billion. It will be an interesting read -- but in the end it will not likely influence the direction of interest rates.

Thurs. April 9, 8:30 a.m. ET
Initial jobless claims for the week ended 4/4
Down 9,000
Here's the report of the week. Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the current market. If this report proved lighter than anticipated, those still engaged with the equity markets in this shortened week may see a substaintial mid-morning rally in equities and a free fall in bonds, mortgage prices, ect.

Thurs. April 9, 1:00 p.m. ET
Treasury sells estimated
$18 billion of 10-year notes
This offering will likely require strong support from the Fed to keep the yield from skipping noticeably higher. A poorly bid auction here will almost certainly put some upward pressure on interest rates.

Thurs. April 9, 2:00 p.m. ET
The mortgage market will close early today for the Good Friday Holiday

Fri. April 10
The mortgage market is closed today for the Good Friday Holiday

Mon. April 13