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Housing Refinance Program Gets Its Second Wind

| On 28, Oct 2011

Help is coming (back) for homeowners who may be stuck in an underwater loan on their home. (Photo credit unknown)

During his trip out West this week, President Obama stopped in Las Vegas to talk about the housing crisis. What a perfect location since the city has been eaten alive in the real estate downturn.

The president was in town to discuss the revamping of HARP, which stands for Home Affordable Refinance Program. It directly helps borrowers whose loans are underwater, but have kept current on their mortgage payments.

The program is a step in the right direction of offering options to a forgotten segment of homeowners. Usually, if a borrower owes more on the home than its worth they cannot refinance. They are stuck in their original loan and this has caused many foreclosures because residents cannot keep up. Borrowers can now try to lock in new lower rates that the market offers.

Obama Administration officials expect to help about one million of the over 15 million people who have underwater loans.

There are a couple of catches here, however:

  • The loan must have originated before May 31, 2009.
  • Applicants must be current on the last six mortgage payments. They are only allowed one late payment in the past year.
  • Income and credit are not checked, but employment is verbally verified.
  • If the loan is shortened (i.e., 30-year to 15-year fixed) and the payments go up, employment will be checked.
  • Self-employed people are still getting the short end of the stick with tougher borrowing rules.
  • The program starts officially on December 1, 2011. More details will be released on November 15.

Critics are already complaining about yet another government program to try to “stimulate” the economy. For some reason, they don’t seem to believe that homeowners need help. Keeping people in neighborhoods helps with property values, crime, etc. because foreclosures are prevented. Less foreclosures mean more financial stability for banks.

By now the middle class should be used to getting the critical end of every stick from conservatives. Despite that, I hope some real families are able to benefit from this help.

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