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» GSES' NEW SIMPLIFIED MOD PROGRAM IN EFFECT Fannie Mae and Freddie Mac are hoping to extend assistance to distressed borrowers earlier with their new Streamlined Modification Program, which took effect July 1. As part of the program, Fannie Mae and Freddie Mac borrowers who have missed at least three payments but are no more than 720 days delinquent may be eligible for a modification that does not require financial or hardship documentation. The program was initially announced in late March. Rather than delay assistance to borrowers, both GSEs stated in mid-May that the program was immediately available, prior to the July 1 effective date, for all eligible borrowers nationwide. The Streamlined Modification Program requires servicers to send modification offers detailing the program's three-month trial period plan to all eligible borrowers. In order for the modification to become permanent, the borrower must prove his or her ability to pay by making on-time payments for the three-month trial plan. "Freddie Mac is focused on adding momentum to the housing recovery by giving distressed borrowers more options to avoid foreclosure," Freddie Mac stated in a release. To be eligible, the loan must be a first-lien mortgage that is at least 12 months old with a loan-to-value (LTV) ratio equal to or greater than 80 percent. VISIT US ONLINE @ DSNEWS.COM GSE STUDY FINDS 28% OF REFINANCERS SHORTENED LOAN TERM IN FIRST QUARTER Freddie Mac released the results of its firstquarter 2013 refinance analysis, showing more refinancers are interested in shortening their loans. Of borrowers who refinanced in Q1, 28 percent shortened their loan term, the GSE reported. That's up from 27 percent in Q 4 2012. The majority (68 percent) elected to keep the same term as their original loan, while 3 percent chose to lengthen their loan term. Eighty-five percent of those who refinanced their first-lien mortgage in the first three months of this year maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table. The analysis also found that refinancing borrowers "overwhelmingly" opted for the safety of fixed-rate loans, with more than 95 percent taking that route. Of those who previously had a hybrid adjustable-rate mortgage (ARM), 87 percent chose a fixed-rate loan when they refinanced, the highest share since Q1 2010. Borrowers who refinanced in Q1 will save on net approximately $7 billion in interest over the next year, according to Freddie Mac. Additionally, the GSE estimated $8.1 billion in net home equity was cashed out during the refinance of conventional price-credit home mortgages, "about the same as the previous quarter and substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006," the GSE explained. For loans refinanced through the Home Affordable Refinance Program (HARP), the median amount of property depreciation was 28 percent, the prior loan had a median age of about six years, and the borrower with a 30-year fixedrate refinance (no product change) had an average interest rate deduction of 2.1 percentage points. For all non-HARP refinances during the first quarter, the median property assessment showed "very little change in value between the dates of placement of the old loan and the new refinance loan." The prior loan had a median age of 4.1 years, and borrowers who refinanced a 30-year fixed-rate into the same product had an average interest rate reduction of 1.6 percentage points. VERBOSITY "A programatic selling of distressed assets by GSEs will be much welcomed by the markets as many private equity and hedge funds are desperately looking for viable products to deploy their optimized solutions and operational infrastructure." —Ron D'Vari, CEO and Co-Founder of NewOak Capital 21

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