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Can this HARP be saved?

By Judy Martel · Bankrate.com
Monday, October 24, 2011
Posted: 12 pm ET

Let's see if the new, improved home refinance program goes any further toward pumping life into the stagnant housing market. On Monday, the Federal Housing Finance Agency, or FHFA, the government agency that controls Fannie Mae and Freddie Mac, announced an overhaul of the controversial Home Affordable Refinance Program, or HARP, that is designed to ease rules and further reduce fees for homeowners seeking to refinance.

HARP was announced with much fanfare in 2009 as a solution for those whose homes had declined in value to refinance to a lower mortgage rate without putting down additional cash. Though projected to help 4 million to 5 million homeowners, it only enrolled 865,000 through July, according to Treasury Department statistics reported in The Wall Street Journal.

The new guidelines, which will be issued to lenders on Nov. 15, will do away with the eligibility requirement that shut out borrowers owing more than 125 percent of their mortgage. Other fees could also be reduced or eliminated. As a key incentive to lenders, restrictions that made it more risky for them to lend are being waived.

Some of the original rules are still in place: Loan amounts must be above 80 percent of the current market value of the home, borrowers must have no more than one late payment in the last 12 months and be current on their payments, and the program is only open to those with Fannie Mae or Freddie Mac loans financed before May 31, 2009.

Do you think the new, improved HARP will help alleviate the housing crisis?

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5 Comments
Jeff
November 07, 2011 at 1:53 pm

The HARP program needs to broaden there market base. The administration keeps extending this program but fails to increase the market base by not revising the "cut-off" date the mortgage was sold to Freddie or Fannie (May 31, 2009). There are too many people who have purchased homes after this date believing the values of real estate have already hit the low mark and the economy would be rebounding. However, the opposite has happened, the values continued to fall after May 31, 2009 the economy worsened and now we have a "second" generation of homes that could cause a 'triple dip' in the housing market. These home owners who had the ability to purchase during this time need asssitance, it is the forgotten group who could turn into the next failures.

Lorraine
October 27, 2011 at 11:29 am

What happens it you have an equity loan and a line of credit loan.

Will they still try to help the homeowner?

LC