The GSEs and the FHA may be preparing to imminently launch an instant aut-refi program which would take millions of borrowers to current market rates overnight!
In the process $45 billion of consumer savings would be created. Welcome QE 1.999.
More from Mark Hanson:
There are millions of American's with rates much higher than market rates who can't refi due to lack of equity or income needed to qualify for a new vintage loan. Or, because after all of the new vintage loan level adjustments to the rate and fee structure for being less than perfect it makes the current 4.5% rate into a 6% rate taking away any benefit.
We have discussed all of this ad nauseum over the past couple of years.
Their solution is to quickly identify all of the borrowers who are making payments on time and send them a one page refi form, which instantly takes their rate to current market. There would be a few other borrower hurdles but not many. The savings to the home owning consumer would be about $45bb per year, more than the cost of the recent extension to unemployment benefits.
This rumor has a lot of credibility behind it -- all of a sudden copycat reports come out from two credible mortgage shops and GSE premium coupons (5.5% to 6.5%) took a beating this morning -- down 4 POINTS on average. This is because these would get crushed if an auto-refi program was announced.
On a side note if this were suddenly announced it would be coupon chaos crushing the massive number of speculators in the premium coupons, which happens to be just about everybody now days.
If this happens expect all those mortgage owners who have never been delinquent to suddenly become huge fans of the Fed, while as a group saving $45 billion: money that will gladly flow into such much needed GDP inputs as iPads and hookers.
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