ALTHOUGH the housing market is increasingly on the mend, hundreds of thousands of homeowners still have little or no equity in their homes and could benefit from a federal mortgage refinancing program that is scheduled to end this year.þþThe Home Affordable Refinance Program, or HARP, was created in 2009 to help ease the pain of the real estate downturn. It is aimed at helping borrowers who are current on their payments but can’t qualify for a traditional refinancing to a more affordable rate because they are underwater on their mortgage — they owe more than their property is worth, because of a drop in their home’s value.þþNearly 3.3 million homeowners have refinanced their mortgages through the program as of November, according to the Federal Housing Finance Agency. However, the volume of refinancings under HARP has been slowing — partly because multiple extensions of the program’s deadline may have caused some confusion.þþ“There are still folks out there who don’t know help is available,” said Marietta Rodriguez, vice president for national homeownership programs at NeighborWorks America, a nonprofit housing and community development organization.þþOften, by the time homeowners seek help from a foreclosure counselor, they are already seriously delinquent and ineligible for HARP. Some counselors, however, say they have had clients who considered HARP but encountered difficulty finding competitive rates and fees.þþStill, about 700,000 borrowers remain eligible and are considered “in the money,” according to the F.H.F.A. — that is, they would benefit financially from the program. (Typically, those who may benefit have a mortgage balance of at least $50,000, with 10 years or more left on the loan, and an interest rate above current market rates.) On average, the program saves borrowers about $200 a month, the housing finance agency says.þþOne problem is that some borrowers are skeptical or fear that an offer of a lower mortgage rate is a scam, even when their own lenders initiate contact, said Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.þþOthers may have had a frustrating experience when trying to use the program in its early years. For instance, the program initially put a cap on the loan-to-value ratio for eligible loans.þþ(Loan-to-value is a measure of how much the borrower owes, relative to the home’s value; the “L.T.V.” is obtained by dividing the amount of the mortgage by the value of the home.) But that cap was later removed, and now there is no maximum, if borrowers are financing into a fixed-rate mortgage. (In November, 9 percent of HARP loans had a loan-to-value ratio greater than 125 percent; and for the full year through November, more than a quarter had L.T.V.s greater than 105 percent, the government said.)þþ“If you were told ‘no’ in the past, consider reaching out to see if you might qualify now,” said Bill Banfield, vice president of Quicken Loans, which is active in HARP.þþWho qualifies? In addition to a good repayment history — no late payments in the previous six months, and no more than one in the last year — the borrower must have taken out the loan before June 1, 2009, and it must be owned by Fannie Mae or Freddie Mac, the two government-sponsored mortgage finance companies. (You can search ownership using the “loan look up” tools on the HARP website; make sure you search by both Fannie and Freddie.) þþOne potential bright spot is that mortgage rates fell this week, potentially making refinancings more attractive: The average rate for a traditional 30-year fixed-rate mortgage was 3.63 percent, the lowest level since May 2013, according to Freddie Mac. Before 2009, mortgage rates hovered near 6 percent, or higher.þþTo start, you should contact the company that services your loan and ask if it participates in HARP. If your lender does not participate, you can apply at one that does. (Some lenders offer HARP only to existing loan customers.) You can find lists of participating lenders on Freddie Mac’s and Fannie’s websites.þþHere are some questions about the HARP refinance program:þþ■ If I have previously refinanced my home under HARP, can I do it again?þþNo. You can refinance just once under HARP.þþ■ If I am delinquent on my mortgage, can I qualify for HARP?þþNo — but you may be eligible for other federal programs, like the Home Affordable Modification Program, which is aimed at helping borrowers who already have fallen behind on their payments by making changes to their existing loans.þ
Source: NY Times
