Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down. The Federal Housing Finance Agency (FHFA) has announced it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac.
Other enhancements to HARP include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013. New federal guidelines for the HARP changes should be released to mortgage lenders and servicers by November 15. Fannie Mae and Freddie Mac have helped approximately 9 million families refinance into a lower cost or more sustainable mortgage product, approximately 10 percent of those via HARP.
HARP is unique in that it is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits.
The basic eligibility requirements for an enhanced HARP loan are as follows:
• Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx.
• Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
• Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
• Current loan-to-value (LTV) ratio must be more than 80 percent.
• Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.
The reaction to the Obama administration's announcement of changes to HARP is mixed. There are those critical of the government bailing underwater homeowners, while others believe the administration isn't doing enough and that the new program leaves out mortgages that aren't financed through the GSEs or those who took out loans in the past two years.
"As leading advocates of home ownership, REALTORS® are supportive of any effort to help more homeowners avoid foreclosure by making mortgage payments more affordable," said Gene Lentz, president of the Silicon Valley Association of REALTORS® (SILVAR). "We hope that the improvements to the program will help more homeowners who are struggling to keep their homes."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.