Industry NewsMortgage

Lenders see holes in Obama refi plan

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Mortgage bankers say they can support the "conceptual underpinnings" of most of the Obama administration's foreclosure prevention plan, but see lots of room for improvement. Weak areas of the plan include an upper limit of 105 percent loan-to-value ratio for refinancings, and the program's requirement that loans to be refinanced be owned or guaranteed by Fannie Mae or Freddie Mac, the Mortgage Bankers Association said in a letter to Treasury Secretary Tim Geithner and Housing Secretary Shaun Donovan. While welcoming the plan's goal of developing "clear and consistent guidelines for loan modifications," the MBA warned that there are legal and regulatory hurdles to applying the guidelines to FHA and VA loans. In addition, loan servicers performing loan modifications need a "safe harbor" that protects them from lawsuits by investors in mortgage-backed securities, the MBA said. At the same time, the group said its members remain opposed to changin...