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View Diary: 'We can't wait': Obama administration announces details of new rules for mortgage refinancing (110 comments)

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    askew, BrazenSerpent

    Using Brazen's example, say you originally took out an $80,000 loan for the home, but now the home is only worth 70k, rather than the 100k when you started.  You are now underwater: the loan you're paying off is larger than the home is worth.   So in order to refinance it, you'd need to take out a loan of over 100% LTV:  80k for a 70k house.

    HARP loans allow for up to 125% LTV,  but even that value was too low in cases, given the property value declines across the country.

    Another provision of this morning's announcement not mentioned in the above article is that the "125% LTV ceiling" restriction is being lifted for fixed loans (ARMs are still being held to 105% LTV).

    This is huge -- about as huge as the reps and warrants relief.  And I'm not seeing an upwards limit being announced, either, though details are still forthcoming.

    All and all very promising.  I'm going to be very interested in seeing the details.

    "Spread happiness" -KO

    by gloriana on Mon Oct 24, 2011 at 03:44:30 PM PDT

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