Supposed to offer refinance options for underwater homeowners

Borrowers struggling with their underwater homes are being offered possible relief in a new program by Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Financing Agency.

It's called Home Assistance Refinancing Program 2.0, and its promoters say it would allow those with a perfect mortgage history, strong overall credit, a steady job, and some money in the bank to refinance into a new lower rate even though they currently owe more on their homes than they are worth.

But numerous mortgage professionals who spoke with WND say the program is likely to fail to have a significant impact because of its nebulous rules.

Further, they say that this program, when combined with failures in other mortgage programs, reveals a pattern of policy making that is naively compassionate but fails in the real world.

HARP 2.0 follows on the heels of HARP, which was rolled out in the beginning of 2011. HARP allowed borrowers owing up to 125 percent of the value of the home, otherwise called loan to value, to refinance with otherwise strong credit.

Brad German, spokesman for Freddie Mac, touted the success of that effort in an email, stating, "During the first nine months of this year, Freddie Mac has financed 312,000 single family mortgages – 67 percent of them were refinancings under our Relief Refinance Program or other refinance options."

Still, the program received complaints because so many borrowers were so severely under water that capping the LTV at 125 percent left a lot of people without the option to refinance. So, HARP 2.0 was to be rolled out this month to waive all LTV requirements.

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Aaron Zeitner, a Chicago area mortgage professional with nearly a decade of experience in mortgages, says his own anecdotal experience with the program was far less fruitful.

"Sure, Fannie and Freddie might allow 125 percent LTV but that doesn't mean the individual banks will follow them," he said.

Home Owner Insurance Michigan - News


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