Recently Announced Home Affordable Refinancing Program - my 2 cents!
Posted by Caroline Ashe on Thursday, October 27th, 2011 at 10:27am.
Many Americas have questions about the Home Affordable Refinancing Program or HARP just announced by the Obama administration. I know they do, because even as an active realtor I was confused and had questions of my own. So as I dug for the details the pros and cons emerged and as I agree with the critics to some degree there is a positive that's being missed in the national media.
The critics state that the Home Affordable Refinancing Program will not do anything to spur the current housing market due to the fact that it doesn't address the on going problem of the nations distressed properties. Distressed properties are foreclosed homes, bank owned homes and short sales. Important side commentary: It's been long feared that this sector of the housing market hasn't hit it's peak yet because of banks not releasing all the distressed homes on their books at once. Good in theory, but the banks can't hold on to them forever creating the fear that the market will be flooded with bank owned homes that would have a negative effect on already low property values.
While I agree the Home Affordable Refinancing Program does not address that smoldering issue it will help the average hard working American that's struggling to make their higher interest mortgage payments. I have long said that the big banks and lenders have no plan of action for homeowners who are not late on their payments, yet still struggling. I've had many clients over the years since the housing bust that have lost their jobs and while that struggled to make their payments they knew sooner or later their savings would run out and those mortgage payments would be late. I have heard stories of responsible Americans urging their lenders to help them while they were still current only to find out there is no plan in place to help them unless they were behind on their payments or could prove a hardship. This always made me scratch my head? Couldn't the banks be more proactive with these homeowners that request help BEFORE the late payments start? It's always confused me....
So my 2 cents are the Home Affordable Refinancing Program will help these homeowners. The homeowners that are on the edge. The effect will be these homeowners being able to refinance at better rates with little to no fees has to trickle down to (hopefully) the home not becoming a distressed property. Will the program eliminate the issue no. The issue of distressed properties will only be resolved in time, time for the housing market to absorb that inventory of homes. But with analyst predicting an estimated 1.9 million - 3.1 million homeowners being eligible - That's HUGE!
Home Affordable Refinancing Program Details:
- Lenders will begin accepting applications as early as November - December 2011
- 125% cap loan value to home value has been eliminated
- The program encourages homeowners to shorten the loan term to 15-20 year mortgages
- Program waives refinancing fees for those choosing shorter mortgage terms and lessens the fees of homeowners staying with 30 year mortgages
- Program is only for loans guaranteed by Fannie Mae and Freddie Mac guaranteed prior to June 2009
- Current homeowners may be able to by pass the appraisal process and extensive underwriting guidelines
I do hope this has answered your questions a little. If you have any specific questions, let me know! I'm happy to answer or find the answer!
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