• English
  • Español
AGENTS: Did you know you can share a personalized version of this post? Learn more!

Underwater Refinance Program Expanded

At a campaign stop in Nevada on Monday, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. The initiative is being looked at as a way to reward those homeowners who have been good payers of their mortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.

While the actual details on the program will not be released until next month, here’s the buzz:

  • It will only pertain to loans currently being serviced by Fannie Mae or Freddie Mac
  • Because of the removal of the LTV cap, appraisals may not be required
  • With the only qualifying criteria announced being that the last six payments be on time, it is possible that income documentation may be streamlined and credit scores might be more forgiving
  • Fees allegedly will be reduced
  • Incentives may be offered to people who shorten their repayment time
  • It also sounds that the banks may be given some incentive by not holding them liable for the underwater portion of the new loan (a major incentive for sure).

The government is on the hook for these loans already. By lowering the payments (by offering lower rates), they will likely help these loans to continue to perform and make it less likely for the underwater homeowner to walk away.

The original HARP was expected to help 5 million families.  After two years, it has yet to reach 900,000; therefore, estimates ranging from 800,000 to 1.6 million borrowers who may benefit need to be taken with a grain of salt.

Whether the Administration is looking for purely political rhetoric points or not, my advice to underwater homeowners is too keep an eye out for the final guidelines because you just might be able to lower your payments.

Members: Sign in now to set up your Personalized Posts & start sharing today!

Not a Member Yet? Click Here to learn more about KCM’s newest feature, Personalized Posts.

5 replies
  1. Mr. K
    Mr. K says:

    So who will eat the lost interest income when the loan rate is lowered? Fannie and Freddie aren’t the recipients of the interest income, they only insure the loan. That means the lender would be losing out on that income, which they won’t do of their own free will. They have to be given an incentive to do so. Which means that the taxpayer will have to foot the bill. Once again we have a government that interjects itself into the taxpayer’s wallet in order to gain political points. And one can only imagine how much it will cost the taxpayers if they have the lenders write down the loan balance. We need a fresh set of inmates to run the asylum we call Washington DC.

  2. Jack Lewitz
    Jack Lewitz says:

    This seems like they are trying to figure out a way to help homeowners but I am not sure who is going to take advantage of this. Will it be homeowners who do not need the help taking advantage of this new program.

    Struggling homeowners are the ones who need assistance and I think this is who this program should be helping.

    Here is a simple solution:

    Refinance anyone to the current market value .
    Mortgage Rate 3%
    Mortgage Term 30-40 Years
    Forebearance due when property is sold. Lender gets money first.


Trackbacks & Pingbacks

  1. […] Hartman of KCM Blog wrote a summary of the latest HARP news in a post titled Underwater Refinance Program Expanded. Remember what Bill Hart said – it’s better to repackage KCM Blog than to merely copy […]

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *