Let’s jump into the Wayback Machine to February 2009, when President Obama visited my alma mater, Dobson High School in Mesa, and unveiled the Home Affordable Refinance Program.
At the time I wrote:
The overall goal is to modify loans in manners that allow homeowners to remain in ther homes rather than face foreclosure. Eligibility is limited to mortgages on primary homes (no second, vacation or investment properties) and appears to be limited to situations where the first mortgage is no more than 105% of the value of the home.
You don’t need to be behind on your payments to be eligible.
Unless I’m reading it wrong, this leaves out buyers in the Phoenix real estate market’s hardest hit markets as homes there have decreased far more significantly.
Come back to the present day, and the President will be announcing a revised version of HARP that would allow homeowners who owe more than 125 percent of their home’s value to refinance their home.
A home sector analyst said the change likely will impact few homeowners as they need to be current on their payments; I’m not so certain, though it could cause some who have stopped paying to kick themselves in the head and wish the program had been expanded much earlier than this.
In the Phoenix area, there still are a large number of owners making payments (and often wondering why) who may benefit from the revised plan. Time will tell.
Also of note from the CNN/Money article:
Fannie and Freddie will also reduce the fees they have charged in the past in order to enable borrowers to better afford the new loans. Among the fees that will be reduced or eliminated are those for appraisals, title insurance and closing costs.
Fees will also be waived for some underwater borrowers who refinance into 20-year or other, shorter-term loans. By doing so, it could help homeowners get above water faster.
A homeowner who has a $200,000 balance on their 30-year mortgage with a 6.5% rate and a home value of $160,000, for example, currently makes payments of $1,264 a month.
If they refinance into a 20-year fixed-rate loan at 4.25%, it will reduce their monthly payments to $1,238 and slash their loan balance to $160,000 in just five-and-a-half years. If they refinance to a 30-year loan at 4.5%, their monthly payments will be quite a lot lower, $1,013, but it will take 10 years to reach $160,000.
Getting back above the waterline on a home in Phoenix … imagine that.