A HARP Revamp Could Help Millions of Underwater Homeowners
The Federal Housing Finance Agency (FHFA) is working on a major plan that would allow millions of borrowers who are underwater on their mortgages to refinance. The plan would be part of a revamped Home Affordable Refinancing Program (HARP).
Since HARP launched in March 2009, nearly 900,000 borrowers have used the program. Proposed changes to HARP include allowing current Fannie Mae and Freddie Mac borrowers with loan-to-value ratios between 80% and 125% to qualify for a refinance rate set by the mortgage originator, not by one of the government-sponsored enterprises.
Additional changes under consideration include eliminating valuation requirements, and raising the HARP ceiling of 125% loan-to-value.
Some analysts have said that any changes to HARP would have a minimal impact because lower mortgages rates might not translate directly into avoided defaults. But others believe that program changes would reduce monthly payments for consumers, who then could funnel the money back into the economy.
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