MORTGAGE LOANS: What AboutThose Seconds?

I was talking with Rhonda, remember her? She is the lady in my office who makes things happen...she is like that...she makes things happen - things gets done! Anyhow,as usual we were talking about the economy (who isn't?),and its impact on our industry,the mortgage/housing industry. I was in the process of delivering my analysis of how I saw events developing over the next 12-24 months in the industry....you know....the usual....home value....interest rates....credit availability, etc., etc.

Last Thursday I attended a seminar conducted by Wells Fargo Bank, here in Los Angeles. Wells Fargo needed to inform its Broker Correspondents,who originate Home Loans with them of how they intend to participate in the Freddie Mac Relief Refinance Mortgage program and the Fannie Mae DU Refi Plus program. These programs are the brainchild of the Obama Administration, in its continued efforts to stem the tide of foreclosures across the nation.

These programs, all conforming loans,however,does not consider second trust deeds. Wells Fargo and other financial/lending institutions participating in the program are not allowed to consider second mortgages under this refinance program - for both Fannie and Freddie Total Loan To Value (TLTV) is unlimited. The first trust deed, however may be refinanced up to 105% of value (LTV),with certain restrictions attendant.

Borrowers, I was about to explain to Rhonda are allowed to bring in their own funds, even gift funds,if their Loan To Value (LTV) on their first is greater than 105%....as if she did not hear my words.... and I know she did....the lady went straight to her point.....but Erle, she said...what about those seconds... all those seconds that are coming to the end of their term...those seconds on the jumbo loans...what happens when those rates go up? I don't know Rhonda! Are you thinking that we will see another series on foreclosures, in the jumbo market? That's what you now have me thinking....yes,indeed! What about THOSE Seconds...oh!boy...help me Rhonda, help.... help me.... Rhonda.