Recently, President Obama announced an Upgrade to the current refinancing opportunities as provided by the Federal Housing Finance Agency, or FHFA .These are a turbo charged version of an earlier program of HARP, or Home Affordable Refinance Program.

An Overview of the New HARP Mortgage Refinance Regulations

The President has been exploring ways to assist homeowners that got crushed in the housing downturn. Some of those are options are open to him without going through Congress, and he pursused those with this expansion of the HARP. A good overview of the basics of the mortgage refi program are here.

 

What are the key differences between the old and the new Mortgage Refinance Rules

HAMP, HARP, or Super-HARP?

Not easy to figure out, but worth the trouble.

The key differences that have been put in place are that the New Mortgage Refinance Rules don't care about how much you are "underwater" in your mortgage. The old rules put a cap - you could only be underwater 125%. So if your home was worth 200,000, you could refinance $250,000. Now, that "cap" has been removed. The other key differences are that the governments are making it easier for the banks to take the redo the loans, by waiving the necessity of an appraisal, and making the fees cheaper for the home owners. Perhaps the biggest difference is that the program has made it possible for lenders to "compete" for these refinancings, and that could make a big difference in the number that actually happen.

Who Won't be Helped by the Expanded HARP

The program won't help people who aren't current on their loans - so if they've had trouble paying, things won't get any easier. It also doesn't reduce principle on their home, so if they are hoping to move, it won't help them either, at least, not until they pay down the principle, which will take a while. There is a program designed to reduce principle on loans: it's called HAMP, or the Housing Affordable Modification Program, but it has largely been ineffective as most banks have not allowed their customers to qualify for the program. And if you've already used the program, you won't qualify either, but hopefully you've been helped enough.

How many people could be Potentially Helped

The figures the government agencies are  publishing are that 1 million new homeowners could take advantage of the new rules. But it's suspected to be a much smaller number.

How the New Mortgage Refinance Program Will Help Massachusetts Home Owners

Well, I don't have great statistics to back this up, except that in Massachusetts, most homeowners aren't underwater more than 120%. The market is down roughly 20% from the peak, so most homeowners qualified under the original program. So the benefits of the program are going to go to people in Arizona, Nevada, and Florida and other places where real estate is down up to 50% from it's peak.

 

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Matt Heisler