Ginnie Mae: Multiple refinances cause problems - Hoey Team ☘ eXp Realty

Dated: May 8 2019

Views: 98

NEW YORK – May 7, 2019 – It can be financially harmful to borrowers and investors to repeatedly refinance their mortgages, warns Ginnie Mae, a government-backed firm that guarantees government mortgage bonds. As a result, Ginnie Mae is taking steps to crack down on the practice of "churning," where lenders push borrowers to refinance their home loans over and over again.

Homeowners may be drawn to the idea of lower monthly mortgage payments, but multiple refinances can lead to more lender fees and a higher bill in the end. Churning is also making investors uneasy about Ginnie Mae's outstanding bonds and causing doubt over whether they'll get paid for their investments.

Ginnie Mae started to take action against individual lenders last year after their activity suggested that they were pushing refis on borrowers – even homeowners who wouldn't benefit from a refi.

Ginnie Mae is focusing on refinances where borrowers also pull extra cash out of their home, and the total loan represents more than 90 percent of the value of the property. It's soliciting feedback from investors and others about a new policy to protect against it.

"When mortgages are refinanced at a rapid pace, the mortgage securities are paid off more quickly than expected, which means investors don't receive the yield for as long as they wanted," The Wall Street Journal reports. "Even a little bit of churning can reduce attractiveness of an entire pool of loans by shortening the life of the bonds."

Churning may be highest among VA cash-out refis, where the loan to value is more than 90 percent. VA mortgage refinances allow service members to take more cash out than typical loans. In some cases, they may be able to take out up to 100 percent of the value of the property.

In conventional mortgages, cash-out refinances are usually capped at 80 percent of the property value; Federal Housing Administration loans cap cash-outs at 85 percent.

Source: "Ginnie Mae Moves to Crack Down on Repeated Refinancers," The Wall Street Journal (May 3, 2019)

From our Florida Realtors Newsletter.

Blog author image

Barry & Kim, Hoey Team 🍀 239RealEstateDeals.Com LLC ☘

"Your Real Estate Concierge" If you are looking for a REALTOR® or one-stop Real Estate Team who will fully communicate; promptly, professionally, and in detail with you, to efficiently help you wit....

Latest Blog Posts

🔔 SBA Simplifies Paycheck Protection (PPP) Loan Forgiveness Application Process 💲 Hoey Team 🍀 239RealEstateDeals.Com LLC ☘ Southwest Florida 🌴

Small businesses that borrowed $150K or less can soon apply for loan forgiveness directly through the Small Business Administration rather than their lender.WASHINGTON – The U.S. Small

Read More

🔥 Fla. Home to 7 Out of 10 Top All-Cash Sales Metros, Naples #2, Cape Coral #8 in the US 🏡 Hoey Team 🍀 239RealEstateDeals.Com LLC ☘ Southwest Florida 🌴

Nationally, cash buyers made up about 1/3 of all 2021 home sales so far, but that percentage rises to 52.6% in West Palm Beach, the top metro for cash sales in the U.S.  The ratio was 52%

Read More

📉 Mortgage Rates Fall for Fourth Week, Hitting 2.78% 🏡 Hoey Team 🍀 239RealEstateDeals.Com LLC ☘ Southwest Florida 🌴

With pandemic numbers rising again from some sources; it’s shaken investors and pushed 30-year mortgage rates lower again this week, though adjustable rates moved a little higher.MCLEAN, Va.

Read More

🚨 July 2021 📢 Just Released Market Report for Naples Area with information for all of Southwest Florida ☘ Hoey Team 🍀 239RealEstateDeals.Com LLC ☘ SW FL 🌴

Hello,Barry & Kim with the Hoey Team ðŸ€ 239RealEstateDeals.Com LLC â˜˜ hope that you and yours are doing good; wherever you are located.Hot off the press please find

Read More