HARP Guidelines Allow for 125% LTV.
The Home Affordable Refinance Program was designed to assist borrowers who have demonstrated an acceptable payment history on their existing Fannie Mae or Freddie Mac owned mortgage loan. Unfortunately due to rising unemployment levels and increasing foreclosure rates, demand for housing has weakened and property values have continued to decline, which has blocked many borrowers from utilizing HARP. I have been working with a few clients with very little success on these HARP programs. I am currently working with my cousin who lives in Central California. He has owned for over ten years. Did a modest debt consolidation refinance back in 2005 and his house appraised for $450K. He is now looking at a value of $185K and owes about $220K. Because vacant homes have sprouted across his neighborhood he actually pays his son to mow the lawns of these REO’s to keep people from trashing the properties and keep the neighborhood esthetic up. He has a perfect payment history but cannot refinance due to the current state of his neighborhood. I know this is not a new story and has been going on for years now but his Fannie Mae owned loan is not refinanceable under HARPs current guidelines. This is the very same program that was meant to help people like my cousin who have been great responsible borrowers lower there payment into a 30 year fixed rate. I think if the borrowers profile is good we should take the appraisal out of the equation. The expansion of Fannie Mae’s and Freddie Mac’s LTV guideline aims to expand qualified homeowner’s refinance opportunities. The underlying initiative is that lower monthly mortgage payments will raise real household incomes and therefore afford more spending power upon consumers. I don’t know if the 125% mark will make a big difference. The homes that qualified at 105% LTV back in April when the product first came out are probably looking at 125% LTV now due to declining values.
