HARP Revamp Could Help Underwater Homeowners

October 24, 2011

President Barack Obama has unveiled new plans to help struggling homeowners refinance their mortgages.

The President made the announcements on Monday in Nevada, the state with the highest foreclosure rate in the country.

The plan expands the Home Affordable Refinance Program, which was created in 2009 to help homeowners refinance but was limited to borrowers whose mortgages were no greater than 125 percent of the value of their homes.

The program helped less than 894,000 borrowers, however, and home values continue to fall around the country. Today, about 11 million homeowners owe more on their mortgages than their homes are worth and many of them are stuck with high interest rates on mortgages that cannot be refinanced, despite record-low mortgage rates.

The new plan will help homeowners refinance their mortgages even though their homes have fallen in value, as long as they are still current on their payments and those mortgages are guaranteed by Fannie Mae or Freddie Mac.

The plan also eliminates some fees and relieves lenders of certain risks in order to help homeowners.

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said Federal Housing Finance Agency 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 the Enterprises. Our goal in pursuing these changes 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.”

The HARP program, which was set to expire next year, will be extended through Dec. 31, 2013 for loans sold on or before May 31, 2009.

More details on the program will be unveiled over the next month, and the program could go into effect as early as December 1.

Not a moment too soon: Experts predict that foreclosures will rise to a record rate next year. The Obama administration is hoping the revamped program will help more borrowers hold on to their homes. Stay tuned to Chicago Real Estate Forum for details as they emerge.

Want to see if you loan is backed by Fannie Mae? Click here.

Want to see if you loan is backed by Freddie Mac? Click here.

For more information on the HARP program, click here.

Categories: Economy, Mortgages

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