While policy makers at the federal level have failed to help underwater homeowners still struggling from the fallout of the financial crisis of 2008, at least one state is making headway to provide real assistance. Oregon is expanding the Rebuilding American Homeownership Assistance Program (RAHAPP) statewide after an eight month trial in the counties surrounding Portland. Not only is the program being expanded to all counties within the state, the eligibility requirements are also being loosened.
RAHAPP is the HARP-like program known as the “The Merkley Mortgage” proposed by Senator Jeff Merkley. Here is how the program works: The state of Oregon buys the mortgage from borrowers accepted into the program and refinances it into a new 30-year loan with a 5 percent interest rate. Borrowers also have the option to refinance to a 15-year mortgage at a 4 percent rate. The program is designed for homeowners ineligible for HARP 2.0 because their mortgages are not secured by Fannie Mae or Freddie Mac. The startup costs for the program are being funded by the Treasury’s Hardest Hit Funds that were allocated to Oregon in 2010. RAHAPP is designed to be self supporting. Payments from homeowners in the program should cover the costs of any defaults.
This is great news for underwater homeowners in Oregon that have been waiting for HARP 3.0. Other states that have been sitting on, or misusing their Hardest Hit Funds should take note of this program. MakeHarp3Happen created a Change.org petition last year that urged all states that were allocated Hardest Hit Funds to implement “The Merkley Mortgage“. The petition is still active, so please go sign it.