Obama Administration unveiled a revamped home loan refinancing program, Home Affordable Refinance Program (HARP), that aims to help “underwater borrowers” whose home values have been declined. The program was first introduced in 2009.
HARP 1.0 was supposed to be the simpler part of the complex plan to revitalize the nation’s housing market when launched two years back. It was intended to help borrowers whose mortgages were owned or backed by Fannie Mae or Freddie Mac. This time HARP 2.0 aims to do more – to lower the mortgage payments as a way to free up cash for other spending that could potentially insulates faster economic recovery.
“If you met certain requirements, you will have a chance of refinance at lower rates, which could save you hundreds of dollars a month and thousands of dollars a year in a mortgage payment” President Barack Obama said in Las Vegas as he unveiled the plan there.
Also, this time around Fannie and Freddie removed or eliminated certain upfront fees charged for weaker credits, the Federal Housing Finance Agency (FHFA) Said. The big four banks combined to write $175.4 Billion in new Mortgages during the three months ended September 30.that is 24% lower than what these lenders wrote last year.
A quick check at the top five mortgage lenders in a 2011 quarterly report shows that Wells Fargo and Company tops the list with $65,662 in lending, followed by Bank of America with $41,425 million, Chase’s lending volume being $35,985 million, and finally CitiMortgage Inc. with $12,211 million of lending volume.
HARP never took off or performed as expected. Many believe numerous factors were responsible for its lukewarm performance over the last two years. Reportedly, the biggest threat was posed by falling home prices acting as a major obstacle to refinance. It helped just 800,000 homeowners, well below the 4 million plus mark originally targeted.
The changes announced on Monday by the FHSA, which regulates Fannie and Freddie, lift a cap that had limited the HARP 1.0 program borrowers whose homes had lost no more than 25 percent of their value relative to their outstanding mortgage. Luckily This limit has been changed.
The FHSA also said that Fannie and Freddie will eliminate certain fees borrowers who refinance into shorter-term-duration. In the big picture, rejuvenating how we oversee the housing marketing plays a pivotal role in repairing to damages we’ve experiences in this sector., Fixing and modifying working of refinance system might provide cushion to consumer spending in the days to come.