img 34

Building Real Estate Header


 Informer Banner

Obama Proposes to Make HARP Available to More Home Owners

President Obama has plans to help boost the housing market by making the existing “Home Affordable Refinance Program” (HARP) available to more homeowners. Currently, it is available to struggling borrowers with loans back by Fannie Mae and Freddie Mac.

Under the new proposal, the HARP program would be expanded to include borrowers with loans that are not backed by Fannie Mae and Freddie Mac, whose loans were securitized in private-label securities without any federal backing, and they would be allowed to refinance into FHA-backed loans, like Fannie and Freddie borrowers.

The eligibility requirements are: the borrowers must have made their mortgage payments over the last six months with only one delinquency, and their loan amount can not exceed the FHA loan limit for their area. If borrowers owe more than 140 percent of the value of their home, the lender has to agree to reduce the loan balance. Also, borrowers wouldn’t have to submit a full file of paperwork for the refinancing as long as they can verify their employment. The proposal would also enable borrowers who still have equity in their home – up to 20 percent - to participate.

These changes will require legislation, so Congress will have to agree to them in order for the expanded program to take effect. Obama has said that he would pay for the extended program using a fee charged to the country’s largest banks so the initiative won’t add to the deficit.

NAR has concerns with this proposal and has been talking with federal regulators to ensure that the program is carefully tailored to the communities who can truly benefit from it, that small – and medium – sized investors be able to participate, and that real estate professionals still continue to play a role in the disposition of the homes.