The good news and the bad news.....
Great News for Underwater Homeowners, Changes to HARP Program Announced
You may have heard that President Obama plans to open up refinancing to more homeowners who are underwater. If you are wondering what this means...and if you can benefit...here are some facts to consider. First, it's important to realize that the president's proposal is not a new program, but a revision to the current Home Affordable Refinance Program (HARP). However there is a big change: Now homeowners can refinance no matter how underwater they are! Before homeowners could only refinance if they were 25% or less underwater, and even then many banks only let people who were 5% or less underwater refinance. Also, with the revision it's possible that an appraisal won't have to be performed, which is great news as this will save time and money. But this is only the case if Fannie Mae or Freddie Mac can electronically estimate the value through their valuation models. Keep in mind that these updates to HARP apply only to people whose mortgage is currently secured by Fannie Mae or Freddie Mac...and whose loan was securitized by Fannie Mae or Freddie Mac prior to May 31, 2009. So the chances are that people who have refinanced since May 2009 will not qualify to refinance under the HARP revision. As of now, the revisions to HARP have been proposed by President Obama and the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac. This directive has been given to Fannie Mae and Freddie Mac and they had until November 15, 2011 to give guidance and details regarding how these changes will be run. To read more details, you can visit the FHFA Web site.
BUT
Everyone,
As some of you know by now, Fannie sent out the announcement about the new HARP rules. However, the automated underwriting will not be available until March from Fannie Mae and Freddie Mac. This does provide at least a way for up side down homeowners to refinance their mortgages but I still highly recommend doing an analysis of exactly how long you will have to stick it out before your home gets back to the break even point. Even if I make your interest rate 0 and you still owe $300,000 on a home that is now worth $110,000, the likelihood of you breaking even on that property in your lifetime is very slim.