Blog

Is there finally help for underwater homeowners to refinance?

Is there finally help for underwater homeowners to refinance?

The Federal Housing Finance Agency (FHFA), along with Fannie Mae and Freddie Mac, announced a series of changes to the Home Affordable Refinance Program (HARP) last week. FHFA is hopeful that the changes being implemented will help more homeowners refinance their underwater mortgages. HARP is currently 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 program is offered to borrowers whose loans were sold to Fannie Mae and Freddie Mac on or before May 31, 2009, with current loan-to-value (LTV) ratios above 80 percent. “We know that there are many homeowners who are eligible to refinance under HARP, and those are the borrowers we want to reach,” said FHFA Acting Director Edward J. DeMarco. “Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by Fannie Mae and Freddie Mac. Our goal is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

Here are some of the new changes being made to HARP:

– Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages, and lowering fees for other borrowers. This means interest rates will be comparable to those who are not underwater.

– Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac. This is great news because many people in South Florida are underwater by more than 25%.

– Waiving certain representations and warranties for lenders that make loans backed by Fannie Mae and Freddie Mac.

– Eliminating a new property appraisal if there is a reliable AVM (automated valuation model) estimate provided by Fannie Mae or Freddie Mac. This will further reduce fees for the homeowner and speed up the process.

– Extending the end date for HARP until Dec. 31, 2013, for loans originally sold on or before May 31, 2009. This gives everyone plenty of time to take advantage of this program.

We feel these changes should provide much needed relief to a large number of homeowners and it should prevent or at least slow down the ongoing foreclosure epidemic in this country. This program is expected to be implemented by Nov 15th of this year. If you would like more information about this exciting new program, please feel free to call Dan Longman, President of Priority Lending Corp, at 954-438-3776 ext.11 or email me at prioritydan@bellsouth.net. Visit us online at www.prioritylendingcorp.com

0