Melvin Watt, the director of the Federal Housing Finance Agency, announced that Fannie Mae and Freddie Mac will be launching a new streamlined refinance loan plan in October of 2017 that is aimed at borrowers with little or no home equity. The final details of the plan have not been released, but it sounds very much like the existing Home Affordable Refinance Program (HARP). It was also announced that HARP has once again been extended. The new expiration date is September 30, 2017. The extension allows the FHFA to continue to offer a loan refinancing option for borrowers that are equity challenged until the new streamlined refinance program goes live. The goal of the new program is sustainability, which is something that HARP lacked. The new program will have no cutoff date and will not limit borrowers to a single use. However, the program will still only service loans held by Fannie Mae and Freddie Mac. Underwater homeowners with non-GSE held loans are still lacking an alternative to refinance out of their high interest loans.
I still see a lot of chatter from hopeful people on social media and in the comment section of this blog about their need for HARP 3.0. I’m sorry to deliver this reality check, but it is just not going to happen. All progress on the initiative stalled last year. HARP 3.0 is a dead end. The Home Affordable Refinance Program in its current state is set to run out at the end of 2016. And that will be it. I’m sorry, but unfortunately we could not Make Harp 3.0 Happen. However, that doesn’t mean you should completely give in to your financial situation. Here are some tips I have for you instead of hopelessly waiting for a HARP lifeline from the government.
1) Build a cadre of real estate and finance professionals that you trust. Just because you feel trapped in a mortgage/housing situation now doesn’t necessarily mean you are or will be forever. There are always options… although those options often require hard painstaking decision making. You need people you can trust within the appropriate industries to help guide if/when you need to make such a decision. Find a good real estate agent, finance professional, tax professional, and real estate attorney that you can trust. There are good ones out there that aren’t slime balls trying to take advantage of you. You want to look for professionals that are in it with you for the long haul and not just trying to make a quick buck. If they are good to you now, can answer your questions honestly, and work with you to build good business relations they will get your money later. You shouldn’t abuse them or steal their time when you know you aren’t yet committed to taking any action, but you should feel comfortable to send a quick email or a phone call when you need some advice. Network with your friends and family to find professionals that they have had positive experiences with.
2) Pay close attention to current home value and property taxes. Many homes that are underwater are being assessed for market values are that are no longer accurate. If your home is over assessed you are paying too much. You have the right to appeal the property value assessment assigned by your local municipality. Many parts of the country are seeing appeal success rates of 75%. I personally shaved $1100 per year off my taxes by appealing. You can go the do it yourself route, or work with lawyer that specializes in property tax appeals. Most charge a percentage of the first year savings and you only pay if you win your appeal.
3) Don’t assume no means no from everyone forever. Keep checking in on those mortgage companies on refinance opportunities. Home values fluctuate. Lending standards shift periodically. Every 6 or 8 months submit a new refinance query. It never hurts to ask.
On May 8th FHFA Director Mel Watt announced that the Home Affordable Refinance Program has been extended another year. HARP is now set to expire December 31, 2016. The eligibility requirements to participate in HARP have not changed. The extension only allows more time for those that can qualify for HARP to take advantage of the program. The FHFA estimates that more than 700,000 home owners nationwide are eligible for the program and would benefit by refinancing under HARP. It also means the program will remain relevant during President Obama’s final year in office. Despite the obvious advantages of HARP, the program has slowed to a trickle. In February Fannie Mae and Freddie Mac recorded just 10,673 HARP refinances. That is down from from 26,964 in February of 2014.
For more than 3 years legislators hid behind a “housing recovery” as one of the factors for not supporting HARP 3.0. It didn’t matter that the recovery was never as strong as it was being made out to be. The people that most needed HARP expanded were a very long way from the housing recovery making a positive impact on their financial situation. A full recovery was always 10 years in the future. Well, now it appears better days for underwater homeowners may be farther away than we imagined. The housing recovery is stalling. The Wall Street Journal is reporting that 21 of the top 50 markets saw negative equity rise during Q4 of 2014. This does not sound like a recovery:
In 21 of the 50 biggest U.S. housing markets, the number of borrowers who owe more on their homes than the homes are worth increased during the fourth quarter, according to a report to be released Friday by Zillow Group Inc., a real-estate information company.
Nationwide, the picture got better, but only marginally so. About 16.9% of all mortgaged homes were underwater in the fourth quarter, down 0.1 percentage point from the third quarter. Zillow said the normal share of underwater borrowers is generally thought to be around 5%.
Actually, it sounds like the complete opposite. A hopeful person might think this would scare Congress into taking some action before this soft “Housing Recovery” completely reverses direction. A good place for Congress to start would be passing HARP 3.0. But I’m not a very hopeful person.
I am sorry to say this but HARP 3.0 has essentially reached a dead end. That has left a lot of underwater home owners that were counting on HARP 3.0 to refinance in a bind. I am often asked to give my opinions on other options. In the past I have been hesitant to do so. I can not in good conscience suggest walking away from a debt. In some instances the best option, perhaps the only option, is a short sale. But I’m not qualified to give anyone specific advice like that. I always tell people to consult with their attorney or tax professional before contemplating any major change with their existing underwater mortgage. Until recently there really were no good alternatives to the Home Affordable Refinance Program. But a new program from Freddie Mac was just recently announced that may be able to help some people that were unable to take advantage of HARP. Some mortgage professionals have even dubbed the program “mini-HARP 3.0″. The program is called Freddie Mac 97% Refi: Home Possible Advantage. Here are the details on the program:
Maximum 97% LTV
Non-Freddie Mac and -Fannie Mae loans permitted
Borrowers must be at or below income limits for their area (click for details)
The current loan is not an FHA, VA, or USDA loan
The current loan had not been HARP-ed
No cash out option
Loan amount is less than $417,000
The property is a 1-unit home, condo or PUD
The new loan is a 15, 20, or 30 year fixed rate mortgage
So who does this new loan help? Well, if you were unable to refinance under HARP because your loan was not held by Fannie or Freddie and you are only a little underwater then this program might actually help you. The loan is only possible up to 97% LTV, but if you are only slightly underwater at around say 105% LTV, it might make sense to scratch together enough cash to get to the 97% LTV requirement in order to refinance into a significantly lower mortgage rate. Mortgage rates are still very low. Contact a trusted mortgage professional today if you think the Freddie Mac Home Possible Mortgage can help you refinance.
The 113th United States Congress officially adjourned sine die on December 24, 2014. “Adjourn Sine Die” means to adjourn with no further meetings. The 114th Congress will commence on January 3, 2015. The first day of actual business for the 114th Congress is January 6th. All pending bills from the 113th Congress are now officially dead. This includes all HARP 3.0 related legislation that was stalled in various committees over the last two years. It is possible the 114th Congress will reintroduce legislation related to extending the parameters of the Home Affordable Refinance Plan, but the likelihood of it ever passing is more remote than ever. Republicans have been staunch opponents of HARP 3.0 all along, and they now have a majority in both houses of the 114th Congress. The Democrats, though spineless, at least gave HARP 3.0 lip service. The Democrats previously held a slight majority in the House of Representatives of the 113th Congress.
We are racing towards the end of the Home Affordable Refinance Program. It is set to expire in 14 months. Legislative efforts to expand the program to include underwater homeowners with non-GSE held loans has never been able to gain any traction in Congress due to partisanship politics. Partisanship and gridlock is never going to end, so that avenue for enacting HARP 3.0 is essentially a dead end. The slimmest of hopes for this plan are on President Obama. The only way HARP 3.0 will happen is if the President implements it through executive order. Advisors with the U.S. Treasury hinted at the possibility of executive order as far back as January 2013:
However, we will also consider non-legislative means at our disposal to help responsible non-GSE homeowners access these low rates. To be the most effective, as well as address investor concerns, the legislative route would be preferable to using existing Making Home Affordable program authority.
-Michael Stegman, U.S. Treasury Housing Adviser – 1/29/13
In February of 2013 the Washington Post reported that President Obama was indeed considering an executive order to expand HARP.
One of the more significant moves under consideration is in housing. Obama is weighing whether to use his executive authority to give more of the country’s nearly 11 million struggling homeowners a chance to refinance at today’s ultra-low interest rates, according to the Treasury Department and others in talks with the administration on the issue.
The executive order never happened. Either the President lacked the backbone to actually use an executive order, or it was simply an idle threat lobbed at Republicans. Regardless, we are still waiting for it. Unless the President decides to actually care about this issue and do something about it, HARP 3.0 will not happen.
We passed a very depressing milestone on July 25th. That marked one year since Congress last considered legislation that would expand the Home Affordable Refinance Program. S.1373 – Rebuilding American Homeownership Act of 2013 (and all other HARP 3.0 related bills) have been sitting idle in the Banking, Housing, and Urban Affairs Committee for an entire year. Congress is completely unwilling to move HARP 3.0 forward, and FHFA Director Mel Watt is making no efforts to assist either. Mr. Watt is steadfastly refusing to make any changes to the program without the approval of Congress, even changes he is empowered to make. The current outlook for HARP 3.0 is bleak. It appears the Home Affordable Refinance Program is going to wind down until its date of December 31, 2015 with no more changes coming. There really isn’t much we can do at this point other that vote out all these scoundrels in the mid-term elections coming this fall.
The only new piece of HARP information I have to pass on is that the FHFA HARP outreach program is continuing on. The second in a series of townhall style meetings intended to reach homeowners still eligible for the program has been scheduled for Thursday, August 14 at 11 AM in Atlanta. If you live in Atlanta and would like to attend here is the address:
Ebenezer Baptist Church, Martin Luther King, Sr.
Community Resource Complex, Assembly Hall
101 Jackson Street, NE Atlanta, GA 30312
I would assume most people that read this blog know their HARP eligibility, but if you are uncertain please click one of the sponsor links/banners on this website for more information.
As hope for HARP 3.0 dwindles, the Federal Housing Finance Agency (FHFA) is making greater efforts to reach home owners currently eligible for the HARP program that have yet to take advantage. Starting in July the FHFA will conduct town hall style meetings in locations with the highest number of “in the money” HARP eligibles. Borrowers are considered “in-the-money” if they meet the basic HARP eligibility requirements, have a remaining balance of either $50,000 or more on their mortgage, have a remaining term on their mortgage greater than 10 years, and their mortgage interest rate is at least 1.5 percent higher than current market rates. The first town hall meeting will take place July 8th in Chicago at the Woodson Regional Library. FHFA Director Mel Watt along with housing experts and community leaders will be on hand to discuss the benefits of the HARP program. The FHFA believes the Chicago area has 36,000 “in the money” borrowers that could benefit from a HARP refinance. The FHFA also plans to do town hall style events in Atlanta, Detroit, and Miami later this year. The date and venues for those events have yet to be determined.
Frankly, I’m skeptical of the estimates of the borrowers yet to take advantage of the program. Every month I get mail from Ocwen, my mortgage servicer, urging me to call them about a HARP refinance. It is not uncommon for me to get HARP refinance offers from other mortgage companies like Quicken Loans too. I know I’m not currently HARP eligible. Why am I getting so much junk mail to refinance with HARP? I think the FHFA should be working to help make more people eligible for program. Regardless of my feelings, getting people that can take advantage of the HARP programs to do so is a noble effort. There are many advertiser links on this site for mortgage services that can help you refinance with HARP. So if you think you may be eligible to HARP there is no need to attend a town hall style meeting Chicago to find out. Just click one of the advertiser links and get started.
Yesterday Mel Watt spoke at the Brookings Institution on the future of Fannie Mae and Freddie Mac. It was his first public speech since taking over as Director of the FHFA. The news was not good for those of us who have been fighting for the Home Affordable Refinance Program to be expanded. Mr. Watt signaled that the FHFA will make no effort to advance HARP 3.0. The FHFA will continue to operate HARP under the current guidelines, eligibility dates, and regulations. Here is was Mel Watt’s remarks concerning the HARP program:
We have also received a number of inquiries about changing the eligibility requirements for the Home Affordable Refinance Program (HARP). Because the number of borrowers we could add by extending the eligibility date or by changing performance requirements is relatively small, we have decided not to alter HARP eligibility parameters. FHFA is, however, working to retarget our HARP outreach efforts to the approximately 750,000 borrowers who already qualify and would financially benefit from refinancing.
We were led to believe that a change in leadership at the FHFA would help HARP 3.0. More lies and broken promises. Mel Watt is no better than Ed DeMarco.