ALTA Supports Effort to Increase Loan-to-value Ratios

July 1, 2009

The American Land Title Association supports expanding the authority of Fannie Mae and Freddie Mac under the Home Affordable Refinance Program to approve mortgages with loan-to-value ratios from 105 percent to as high as 125 percent.

Kurt Pfotenhauer, the chief executive officer of the ALTA, said the current ceiling has kept too many borrowers on the sidelines, and that this move would open the door to more homeowners looking to refinance.

"Although the decline of home values is slowing, many home owners still do not qualify for the program," Pfotenhauer said. "Increasing the loan-to-value ratio would afford home owners hampered by falling home values the needed opportunity to refinance high-cost loans."

“But we should keep in mind that driving refinance activity is only part of the solution. Mortgage rates need to be maintained at attractive levels and the $8,000 first-time home buyer tax credit should be expanded to $15,000 and be offered to all home buyers to spur activity in the housing sector,” he continued.

Last week, James Lockhart, director of the Federal Housing Finance Agency, indicated the department is considering increasing LTVs significantly higher than 105 percent. The administration unveiled the initial refinancing program in February and estimated it will refinance at least four million homeowners who have loans that are owned or guaranteed by the government sponsored enterprises. However, the GSEs have refinanced only 80,000 homeowners under the program that the Obama administration has promoted to help borrowers who can’t qualify for a standard refinancing.