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Ads hawk a failed HAMP and HARP

By Holden Lewis ·
Thursday, July 29, 2010
Posted: 9 am ET

A new advertising campaign will "encourage homeowners who are struggling with their monthly mortgage payments to learn about the Making Home Affordable Program," according to the federal Housing Department.

It's being done pro bono, so you can't complain about wasted tax dollars. But, still, doesn't it seem like the Housing and Treasury departments should concentrate on improving Making Home Affordable -- you know, ensuring that more people can use it?

The Home Affordable Modification Program, or HAMP, started sponsoring loan mods in May 2009. The goal was to modify 4 to 5 million mortgages in a few years. In the program's first 13 months, it resulted in 398,021 permanent modifications.

Let's talk about HARP -- the Home Affordable Refinance Program. At first, HARP allowed people to refinance their mortgages if they owed 80 percent to 105 percent of currently appraised value. Last July, that 105 percent threshold was bumped up to 125 percent. That means if you owed $125,000 on a house now worth $100,000, you could get a HARP refi.

It hasn't worked. From last July until the end of March, just 6,535 borrowers were able to take advantage of HARP refis between 105 percent and 125 percent. Another 285,049 got refis at less than 105 percent loan to value. The goal of HARP was to refi 4 to 5 million mortgages by the end of June 2010. The administration's response to HARP's failure was to extend it another year.

With so few people getting modifications under HAMP, and so few people getting refis under HARP, I suspect that the problem isn't lack of awareness. I hear from plenty of homeowners who are aware of the programs but can't get any help.

Here's an article about a guy who fought hard and finally got a HARP refi.

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September 14, 2010 at 4:41 pm

HARP is a joke in markets hardest hit when the bubble burst. I got an immediate verbal approval pending the appraisal. But when the appraisal of our $340K home came back at $160K, the refi fell through. And we were in the minority that actually put 20% down on the original loan. If we didn't qualify, it's unlikely that anyone in Arizona that bought in the peak years would.

Don Borham
August 10, 2010 at 1:31 am

I am a Mortgage Broker that has worked with families trying to secure a loan modification under HAMP. All my families qualify using the Waterfall Income approach, but none of my families have qualified using the second test, NPV. The second test is a well guarded lender secret where they run a test to determine if it is more profitable for the Bank to foreclose or modify the loan.

HAMP's program results have showed that in 96% of the time it is in the lenders interest to foreclose on the family. The Obama Administration has allowed the Banks to control the process and the Banks have determined that a 4% modification rate to be a success.

The failure to fix HAMP typifies the half-measures the White House uses to address problems facing our Country. This decision has been bad for the housing recovery, bad for America and bad for the Democrats in November. If you don't fix the problem you make it worse.

What is never discussed is how much is the American taxpayer reimbursing the Bank for each foreclosure. How much incentive is paid to the Banks to harm and destroy families rather than to keep them in their home.

August 05, 2010 at 1:50 pm

The NPV- google this- is an arbitrary judgement on your qualifications for HARP and HAMP. This is the only tool used to turn you down or allow you some help. It is unreliable, not transparent, and varies from day to day. It should not be allowed!

August 05, 2010 at 1:48 pm

Yes, they are playing "chicken" with us. Fannie Mae is playing a game. When I went to my "servicer" Citi-, for a HARP, they did 2 appraisals and charged me for them. HARP said my NPV was positive which is bad. I owed what they claimed my home was worth. Then I called HAMP. Fannie's npv came back negative. They claimed I had 70K in equity. Dishonesty is the reason no one can get help.

Kathy Phillips
August 02, 2010 at 10:14 am

HARP refi isn't working for all of the buyers who used an 80% first and a second for 10 or 15% more and have a CLTV of 90 or 95%. Works for the LTV, but not the CLTV. Any lenders out there that allow a CLTV of greater than 85%?

Andy Boyum
July 30, 2010 at 3:48 pm

HARP is a joke! My wife & I are trying to refinance but we're getting stonewalled by Wells. We have our loan with them and were told by a broker that we'd have to use them being we have mortgage insurance. We have 760+ credit, under 45% debt ratio's, about 30k in 401k reserves, have never been late on a payment and am looking for 125%. They told us we're ineligible for the 125% because we have 1 credit card that is maxed out. I think it's because the MI we already have isn't going to cover them because we bought at 100%, now asking for 125%. That and the fact that they make more money on us at 6.75 then they will at 4.75 - So are they daring us to stop making our payments?