Marc Guzman's West County Blog

Ok maybe it’s not HARP 3.0 if HARP 2.0 hasn’t been released.  As a quick refresher, the Homeowner Assistance Refinance Program (HARP) was created to help underwater homeowners refinance their mortgages to current interest rates.  But HARP has fallen short of its original goal of helping millions of homeowners mainly due to its limitation of a maximum Loan-to-Value (LTV) ratio of 125%.  It is estimated that in the hardest hit markets, approximately 40-50% of homeowners are underwater by more than 25%.  Thus HARP 2.0 was created which would eliminate the 125% Loan-to-Value ratio among many other changes.  This would allow many homeowners to refinance to current interest rate levels allowing some to save as much as $300-$500 per month on their payment.

What’s the catch?

HARP 2.0 was to be released in December 2011 and be available to homeowners whose mortgage was owned by Freddie Mac or Fannie Mae.  The homeowner also has to be on time with their payments with no more than one late payment in the previous 12 months.  But the Federal Housing Finance Agency (FHFA), who is in charge of overseeing Fannie Mae and Freddie Mac, delayed HARP 2.0 until March 2012.  Their reasoning was due to trying to update the banks on the new procedures.

President Obama and the State of the Union

It appears that President Obama wanted to make this a part of his State of the Union address.  He did not go into too much detail over the new refinance program to take place in the coming months but he throw in an interesting twist.  The new HARP 2.0 would allow homeowners with mortgages NOT guaranteed by Fannie Mae or Freddie Mac to be refinanced.  Read that again… Now we know it wouldn’t go over well if taxpayers had to pay the bill to further refinance mortgages but Obama said the program would be funded by “a small fee on the largest financial institutions.”

I wonder if this “small fee” would come from the settlement between the Attorney Generals and the largest financial institutions?