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Big banks suddenly making big bucks through HARP

Banks are cashing in by taking advantage of new HARP rules – refinanced loans are at lower rates, but still above market rates.



Home Affordable Refinance Program’s benefits

For underwater borrowers, Uncle Sam’s Home Affordable Refinance Program (HARP) appeared to be a saving grace after the housing market crashed, but when homeowners applied, most were either not eligible, or discouraged by servicers from applying as the process was complex and some say that incentives were too low for servicers to put homeowners in lower interest mortgages.

HARP has undergone a makeover recently, courtesy of the Obama Administration, and now, big banks have their ears perked up as the rules change. According to the Wall Street Journal (WSJ)1, banks are suddenly on the HARP bandwagon after years of dragging their feet.

The rule change makes it easier for borrowers to refinance with their current lender, a major reason banks are getting in on HARP. Nearly three in every four HARP participant goes to their existing lender for the reduced interest refinance packages, and banks are using this as a means to put them into mid-interest loans that are lower than their current rates, but significantly higher than the low interest rates being given to new mortgage borrowers.

“There’s essentially a monopoly on refinancing,” Housing and Urban Development Secretary Shaun Donovan recently told lawmakers. “Whoever holds their current loan, whoever is the servicer, they can charge them — and we’re seeing this — very high fees.” The five largest mortgage servicers are responsible for 58% of the mortgage refinance market.

Refinancing above market rate

WSJ reports that it is estimated that HARP borrowers are refinancing into loans up to one half of a percentage point higher than the market rate for refinances. Wells Fargo holds nearly one third of all refinanced mortgages. The company tells WSJ that their rates are “competitive with our traditional refinancing loan options.”

Banks and HARP loans are getting along well now because refinanced loans are less of a risk when they are securitized and sold, as HARP homeowners have been shown to be less likely to default than they were before, and a low risk of paying off the loan early, reports the WSJ.

Lenders could see upwards of $12 billion in revenue this year tied to HARP refinances, while HARP borrowers are expected to save between $2.5 to 5 billion this year, representing a lucrative opportunity for big banks.

1 WSJ Report

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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  1. Mark Brian

    June 18, 2012 at 8:44 pm

    Imagine if the banks had been more willing to work with home owners 2-3 years ago

  2. jhollak

    June 20, 2012 at 2:22 am

    @realtyrealities thank you for the lead on mojo. Lots of fun.

  3. Wisconsin payday loan

    August 30, 2012 at 1:08 am

    Unlike most other regulated industries, the regulator is typically also a participant in the market, being either a publicly or privately governed central bank. Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case.

  4. Colorado payday loan

    August 31, 2012 at 6:20 pm

    The loans are also sometimes referred to as “cash advances”, though that term can also refer to cash provided against a prearranged line of credit such as a credit card.

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Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?



Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.



aging housing inventory

aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.



zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub,, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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