Here’s an interesting aspect of the changes to the Home Affordable Refinance Program, better known as HARP, according to a story on Fox Business:
Those who bought a house as their primary residence but now hold the property as an investment will be able to refinance through HARP at an additional cost.
In other words, those folks who became unintended landlords over the past handful of years when they were unable to sell now can refinance.
Mortgages sold to Fannie Mae or Freddie Mac before May 21, 2009 are eligible for the program; those who participated in the HARP program previously may not do so again.
And if you have a second mortgage, that lender would need to sign off on you participating in the HARP program – that could be an obstacle for some homeowners.
The estimable Dan Green and I differ on one point. Says Green to Fox,
“The new HARP program is closed to homeowners who have bought new homes over the last 24 months,” he says. “That excludes a huge group on borrowers that could benefit from HARP.”
Yes, it definitely excludes a large group but I think the program should be viewed as a solution for those who found themselves caught up in an unprecedented and to some degree unforeseen real estate swoon (unforeseen at least in the steepness of the decline.)
If a buyer purchased over the past two years, theoretically they were more aware of the risks involved in such a purchase, including the possibility of future lower interest rates and a continued drop in value.
In other words, there needs to be some limit to where people expect the government to step in and help. Two years is arbitrary but it’s reasonable.
More details will be provided to lenders over the next couple of weeks, so if you think you may be interested in participating in HARP, stay tuned.
UPDATED 2:37 PM – With a hat tip to my broker, Dan Green provides just about all the information you would want to know about HARP, at least as we know it now.