HARP 2.0: Modest Changes, reports are saying not a game changer, but every little bit helps.
HARP 2.0, the media's tag for the new program, will help, but it is very limited and it will have little or no impact on foreclosures, or the estimated 6.4 million homeowners nationwide who are behind on their mortgage payments. The new HARP does expand the number of homeowners that would be eligible from the original plan.
HARP began in 2009 to help borrowers whose loans were backed by Fannie Mae, Freddie Mac or the FHA, but did not have enough equity or negative equity to refinance to interest rates that were dropping. Under the original version of HARP, borrowers who were current on their payments and owed up to 125 percent of the current value of their homes could refinance their mortgage to the lower rates.
HARP has fallen short of expectations over the past two and a half years and earlier this year many in Congress were seeking to end it. So far only approximately 838,000 homeowners have benefited from the program. And, many of these are now back to looking at a short sale or foreclosure. The loan modification programs with lenders have been a very difficult process to get through to actually obtain your loan modification/refinance. And, the loan modifications have been so slight that if the homeowner faces any additional challenges with a pay cut, or if one person in the household loses their job, they are right back to not being able to make the payment. The new HARP is widening the base with looser eligibility requirements. But I still question the modifications to the loan. The loans need be modified enough for homeowners to withstand life changes (changes that didn't come into play with lower unemployment and a booming economy), so that homeowners won't be back to square one. Let's be honest, the economy is too fragile not to expect changes in the lives of the people that live behind the doors of these homes.
Borrowers with FHA, Fannie Mae or Freddie Mac mortgages that were sold to Fannie or Freddie before May 31, 2009, will be able to refinance, no matter how far underwater they are. Banks will only have to verify that borrowers have made their last six payments, that they’ve haven’t missed more than one payment over the past year, and that they have a job or another source of regular income.
Other key changes:
- Appraisals are no longer required if there is a reliable automated valuation model (AVM)–a significant hurdle in the previous plan.
- Risk-based fees have been eliminated for borrowers who refinance to 15-year mortgages.
- Existing mortgage insurance coverage can be transferred much easier than under the original HARP.
The new HARP won’t help homeowners who are behind on their payments and at risk for foreclosure, however, it is great news for homeowners who have not been able to refinance because they owe more on their mortgage than their home is worth, and at the same time, don’t qualify for a short sale or a loan mod because they are current on their payments and still have income and assets.
The goal of HARP is to keep putting money back into the pockets of this segment of homeowners so it will mean more dollars going back into the economy, potentially heading off strategic defaults and keeping and lessen the amount of homes entering the foreclosure pipeline.
This is my radical opinion (sarcasm here, my ideas are not radical, just common sense) is that we are really making all of this too difficult. We all know that loans need to be repaid. We all agreed to repay them when we signed for them. What we didn't know was the economy would falter and that housing values would decline, but this is affecting everyone, not just a few. We also know the economy is fragile. We need change that allows homeowners to extend their mortgage length and lowers the rate to make it possible to live and spend money in their community as we rebuild the American economy to a sustainable pace. As the housing market improves, homeowners can sell their home and pay off the mortgage, or go back to paying more on their notes for a shorter term as incomes stabilize and rise with the economy. Homeowners that need to sell for better jobs in different markets should be able to get a loan for their deficit amount on the mortgage at a long term and low rate so they can purchase a home in the market they are moving to....allowing them to help improve the housing market in the community they are moving to and still afford to spend their dollars and keep the economy moving. They too could pay down the notes faster as their incomes improve with the economy...saving them money on the interest they won't pay. And yes a small percentage of people will take advantage of the new offerings. But this has always been the case, even when home values were rising there was still a small percetage of homes that were foreclosed on. The majority of homeowners want to stay in their homes, and they want to meet their obligations. By foreclosing on homes and letting them sit for years, isn't improving home values in communities, and it isn't helping the economy. I believe we need to provide a program for the American people—all Americans—that allows them to continue working and living in communities while banks and investors are receiving payments on the debts owed to them.
This is my radical opinion (sarcasm here, my ideas are not radical, just common sense) is that we are really making all of this too difficult. We all know that loans need to be repaid. We all agreed to repay them when we signed for them. What we didn't know was the economy would falter and that housing values would decline, but this is affecting everyone, not just a few. We also know the economy is fragile. We need change that allows homeowners to extend their mortgage length and lowers the rate to make it possible to live and spend money in their community as we rebuild the American economy to a sustainable pace. As the housing market improves, homeowners can sell their home and pay off the mortgage, or go back to paying more on their notes for a shorter term as incomes stabilize and rise with the economy. Homeowners that need to sell for better jobs in different markets should be able to get a loan for their deficit amount on the mortgage at a long term and low rate so they can purchase a home in the market they are moving to....allowing them to help improve the housing market in the community they are moving to and still afford to spend their dollars and keep the economy moving. They too could pay down the notes faster as their incomes improve with the economy...saving them money on the interest they won't pay. And yes a small percentage of people will take advantage of the new offerings. But this has always been the case, even when home values were rising there was still a small percetage of homes that were foreclosed on. The majority of homeowners want to stay in their homes, and they want to meet their obligations. By foreclosing on homes and letting them sit for years, isn't improving home values in communities, and it isn't helping the economy. I believe we need to provide a program for the American people—all Americans—that allows them to continue working and living in communities while banks and investors are receiving payments on the debts owed to them.
IF YOU HAVE QUESTIONS ABOUT SELLING YOUR HOME OR BUYING A NEW ONE, DON'T HESITATE TO CALL, TEXT OR EMAIL ME.
My promise to my clients: I try to always remember what it is like to walk into this incredibly complex world of buying and selling with little or no knowledge of how the process works. I know that behind the door of your home and in your life there is much more going on than just your real estate transaction. I work with each person, not the house, and with the whole person, not just the issues surrounding the transaction. When I attempt to put myself in your shoes and contemplate what you are dealing with I am most effective.
The Benadum Team
Amy Bumpus
Straight Talk—Always
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