HAMP, HARP, and HAFA. The big three of failed programs - at least so far.
Today, it was announced that the government would be expanding the HARP program to include more underwater borrowers. The problem is that as currently construed only loans currently guaranteed by Fannie and Freddy will qualify. Whoops. That eliminates most of the higher dollar amount, interest only or neg am, NINJA product sold in CA (except for maybe the Inland Empire and does anyone there really want to refi anyway?).
A randomly check of a few dozen properties and guess what, none qualify.
HARP fails to address the major issue for upside down borrowers: they owe more than the house is worth. Will borrowers refi properties that will never be worth what they owe just to save a few hindred dollars a month when a strategic default or short sale makes more sense? That remains to be seen.
Here's how NAR rolled this out to it's member Realtors.
HARP Refinance Program Expanded
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) announced today that 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 program enhancements 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.
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%.
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.
If the new guidelines aren't released to the lenders until mid November, maybe they implement them by Jan 1, 2012 if we're lucky. Stay tuned for updates as they become available.