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HARP gets 2-year extension

By Holden Lewis · Bankrate.com
Thursday, April 11, 2013
Posted: 1 pm ET

You have been given a two-year extension to refinance your underwater home.

The Home Affordable Refinance Program had been scheduled to expire at the end of this year. Now it will expire at the end of 2015, at the direction of the Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac.

HARP -- a disappointment

HARP began about four years ago. According to the FHFA, more than 2 million homeowners have refinanced their underwater mortgages under the program in those four years. When the program was announced, the Obama administration expected 2 million refis in just 16 months. So, to get to 2 million refis, it took three times longer than initially estimated.

The Obama administration apparently believes borrowers are ignorant, inattentive and lazy, and that's why we haven't refinanced under HARP in greater numbers. In today's announcement, the FHFA says it "will soon launch a nationwide campaign to inform homeowners about HARP" and will "motivate them to explore their options."

Many borrowers aren't qualified

Then the FHFA lists the five criteria for HARP eligibility. Bankrate shows the criteria in this easier-to-understand HARP eligibility flowchart. Now, the FHFA thinks homeowners aren't aware of HARP and they're not motivated, and that's why the number of HARP refis isn't higher. But I think the problem begins with those eligibility criteria.

The first criterion is that the loan must be owned by Fannie or Freddie. A lot of homeowners are stuck with unrefinanceable underwater mortgages because a bank owns the loan. I humbly suggest that the feds come up with another eligibility criterion: If banks want to be eligible for FDIC deposit insurance, require them to refinance underwater mortgages that they own. That would give banks three options.

  • Refinance the loans.
  • Relinquish deposit insurance and scare depositors away.
  • Sell the loans to Fannie or Freddie.

If the number of refinances is disappointingly low, it's not because we're ignorant and unmotivated. It's because financial institutions and regulators thwart us at every turn.

Now you have two more years to fight to get the refi you want. Good luck with that!

Follow me on Twitter @HoldenL.

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8 Comments
Carrie
April 15, 2013 at 4:27 pm

This is great news about HARP 2.0 but is there going to be a HARP 3.0?

Larry and Carol Wilkerson
April 15, 2013 at 1:32 pm

why is my comment not showing up?

Mike
April 11, 2013 at 6:45 pm

Peg and Iva you have the same frustration as many others in the situation where Freddie or Fannie don't own the loan. Your loans are part of a loan portfolio owned by the lender where you are making your payment. The issue is the fed's can't force BOA or any other lender to refinance people who are within their portfolio. I am all for people getting help through the HARP 2.0 program. The only reason they can refinance people that are backed by Fannie and Freddie is because of the relationship those companies have with the government. There are things Washington could do to make it easier and I hope that happens. Talks of HARP 3.0 are going to die down now after the extension of HARP 2.0.

Iva
April 11, 2013 at 4:46 pm

How about the feds doing a HARP for all - not just those owned by fannie & freddie... might have a better chance of the program succeeding

peg
April 11, 2013 at 4:38 pm

you absolutely hit it on the head for the reasons it has failed. The criteria. We are stuck with BOA. They messed up our auto drafts twice even admitted was something in their computer programming (had amounts in escrow from trying to fix the first glitch so it would not take it out, fixed it-so we thought and nope it glitched again and has been a nightmare ever since) - especially with a budget so tight there was no room for the error so now the credit score is hit and they refuse to mod it by placing the glitched 1 month to the end and restarting up the autopay draft- to me seems a very simple fix - instead we get offered forbearance to almost double the payment for 6 months (would only take one or 2 at that amount to bring it beyond current)so what kind of mess then would that bring because 4 of those 6 would be 1) way over what is due & 2) too much extra into escrow which would have to be refunded as overage. Made calls, and no callbacks. The one stop person who is suppose to "reach out" every 2-10 days? think has now dropped off the face of the earth.
So Harp is a failure - Home Affordable Refinance Program would help us for sure - reduce us from 7% to maybe even 4% would lower the payment - instead they want to raise it more and push us closer to the edge of foreclosure - probably cuz we only have 12yrs left on our note and being FHA they would profit even bigger then -no matter how you look at it BOA will get their money.

Ra
April 11, 2013 at 3:13 pm

R