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 "The consumer needs help," says Metro Broker Mike Hixon when asked about the government's revisions of the HARP program. "But Hixon isn't convinced that HARP 2.0 is going to do a lot for underwater homeowners." reports the Denver Business Journal. "A lot of people aren't going to understand the stipulations," says Hixon.
The new guidelines have
been dubbed "HARP 2.0" and it will be up to each lender to implement the new
rules. Hixon estimates between 5 million and 8 million homeowners will try to take advantage of the new HARP program, but most won't qualify.
The biggest change is raising the cap of debt, previously the HARP program only helped homeowners who owed up to 125 percent of their home's value. HARP 2.0 is open to homeowners who are deeper in debt.
Hixon suggests that the first step struggling homeowners should take is to contact the holders of their first mortgage. "Talk to them and be very open about your situation,"he says, "Believe it or not, they're pretty good to work with."
Read the full article courtesy of the Denver Business Journal:
HARP 2.0 offers refinance help
for some homeowners
Premium content republished courtesy of Denver
Business Journal By Heather Draper, Reporter
Date: Friday, December
2, 2011, 4:00am MST
In theory, recent
revisions to the federal Home Affordable
Refinance Program (HARP) should help more underwater home-owners qualify for
mortgage refinances, reducing loan defaults and adding much needed cash flow to
the economy.
In reality, issues
remain that limit the people who will qualify for refinancing under what has
been dubbed "HARP 2.0," experts say. So the revamped government program will
help, but it likely won't be the force that lifts the housing market out of the
doldrums.
"I'm not sure the results
are going to be earth-shattering," said Omar
Yassine,
audit practice senior manager in the Denver office of
Chicago-based Grant Thornton LLP. "Are they [banks] willing to participate? Yes. Is it
going to be a big deal? Probably not."
Fannie Mae, Freddie Mac loans eligible
On Oct. 24, Fannie Mae and Freddie
Mac released HARP guideline changes to loan servicers
and lenders to allow more underwater borrowers to refinance to lower-rate
mortgages. Only home loans guaranteed by government-sponsored Fannie Mae or Freddie
Mac before May 31, 2009, are eligible for HARP.
One of the biggest
changes was the removal of a requirement that homeowners can owe no more than 125
percent of what their homes are worth. Declining home values since HARP was
implemented in
2009 meant that fewer
people were eligible for a HARP refinance.
"We know how values
have been dropping in many states. So many homeowners didn't qualify on a
refinancing, and they didn't qualify under HARP," Yassine said. "So the program
was basically dead in the water."
As of June 30, about
838,000 borrowers had refinanced through HARP since the program launched, according
to the Federal Housing Finance Agency. When it was implemented, the hope was
that millions of struggling homeowners would get assistance with a loan refinance
to stay in their homes.
Removing the
loan-to-value ratio cap should help more homeowners qualify, Yassine said,
although Colorado hasn't had the major deterioration of home values that some
states - such as Nevada, Arizona, California and
Florida - have experienced.
Federal officials are
forecasting that HARP 2.0 will nearly double the number of participants in the
program. Freddie Mac estimates 1.5 million mortgages will be refinanced through
HARP from Dec. 1 until the program ends on Dec. 31, 2013.
Assuming an average
$200,000 loan balance, the HARP changes could increase loan originations between
$200 billion and $300 billion by the end of 2013, according to Frank Nothaft, chief economist for Freddie Mac.
Colorado banks participating in program
Several Colorado banks
are participating in the expanded HARP program and are marketing it to their
customers, according to the Colorado Bankers Association. CBA didn't have an exact
number of banks participating, but spokeswoman Caroline Joy said banks want to help
homeowners stay in their homes.
"Foreclosure is the
very last resort for banks," Joy said. "We're optimistic that the extension of
HARP and recent guideline changes will be a valuable tool that banks can offer
their customers to make payments more affordable."
But Mike Hixon of Metro Brokers isn't convinced that HARP 2.0 is going to do a lot for
underwater homeowners. "I don't see a lot of difference between HARP 2.0 and
the original program," he said. "The silver lining, I guess, is that at least
we've driven home the fact that the consumer needs some help."
Hixon estimates that
between 5 million and 8 million homeowners will try to take advantage of HARP
under the new rules, and most won't qualify.
"A lot of people aren't
going to understand the stipulations," he said.
Hixon said the first
step for homeowners who are struggling with their mortgage and are current on
payments is to contact the holders or servicers of their first mortgage. "Talk
to them and be very open about your situation," he said. "Believe it or not,
they're pretty good to work with."
Photo Source: RefinanceMortgageRatesCalculator.net
Posted on December 06, 2011 08:54:25 by  Scott.Shields
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