In an article entitled Foreclosure Relief? Don’t Hold Your Breath, (December 24th,2011) the NY Times reported on a new program to help homeowners with foreclosure reparations.
“Throughout the foreclosure crisis, Washington has done little to help people hang on to their homes. All those programs that were supposed to help — HAMP, HARP, Hope for Homeowners — have mostly failed.”
More than a helpful link on information about the HARP program itself, this link is provided to show the overall messiness of all of these programs. For anyone who is going through the foreclosure process (or is thinking about it), in some cases these programs can hurt, more than they help. (So, do your research.)
“None of this surprises Ms. Cohen or others familiar with the regulator. “This is the O.C.C . that we’re talking about,” she said. “It has a long record of favoring banks over homeowners.”
Today, Bloomberg News, a multinational financial news organization, published an article about the HARP program.
No Relief for Homeowners Sut Out by U.S. focuses on the stories of several people (myself included) who have had difficulty taking advantage of the record-low percentage rates that could help alleviate excessive financial burdens.
My attempt to refi through my primary home lender, Bank of America, resulted in 3 different refi outcomes within a 2 month period under the same program. (Outcomes were: I did not qualify, then was offered 5.375%, then 4.5%.) In other words, not even the lenders who distribute the programs understand the guidelines.
2 days ago, in an article entitled “A New Shot of Mortgage Relief,” the NY Times reported that interest rates conventional mortgage rates are averaging around 4%. 70% or the 22 million borrowers who are eligible for the HARP refinance program have 5% interest rates or higher.
To recap, my current interest rates are 6% and 8.49% fixed – and Bank of America offered me a HARP refinance at 5.375% with $3000 in closing costs on the 6% loan. If the HARP program is refinancing homeowners who have 5% interest rates, why are they offering me 5.375%, only .625% lower than my current 6% interest rate? (Their explanation was that it was contingent on me having a 2nd mortgage through another lender.)
The NY Times article highlights some critical viewpoints about the HARP and HARP phase 2 revised programs. Among them, Mr. Compton, a public transportation planner and homeowner is quoted in this article with the “…should be a ‘perfect fit for me.’” sentiment.
“It angers me quite a bit,” said Mr. Compton, who added that unlike other borrowers, he never took out a home equity loan during the boom and has consistently paid his bills. The refinancing program, he said, should be “a perfect fit for me.”
It’s a statement that I have been heard to say verbatim on many occasions about the HARP program. If my situation is the typical case study that HARP is using to illustrate it’s action plan, then it’s not doing it’s job.
2 HARP 2 program issues:
- The program is not standardized between lenders.
Lenders are able to created their own sub-criteria for HARP qualification. In other words, they can customize the program to suit their best interest, rather than the best interest of the people the program is designed to aid.
It’s not enough to tell American’s that this program exists to help people manage their continuous submersion into underwater status. We need to see the number of underwater homeowners who are helped (or not helped) by the program, not just in the NY Times, but in the local media, and the Occupy Wallstreet protests. This has a direct affect on how the American public views people who foreclose. Many still believe that foreclosures can be prevented if people work harder to access programs. In fact, the programs are extraordinarily complicated, narrow in scope and hard to access. And sometimes cost homeowners upwards of thousands of dollars, sometimes with no success.
- Standardization on how lenders determine the value of your home without appraisal is ambiguous.
It’s great that homeowners no longer have to pay $300-$400 for an appraisal every time they attempt to refinance. Unfortunately, lenders have found a way to use this to their advantage.
Case in point: The Community Neighborhood Housing Agency told me that lenders can look at Zillow.com or your Estimated Tax Value to assess the value of your home in order to determine if you qualify. On Zillow.com, my home is valued at $124,900. My Estimated Tax Value is $40,000. When I was gathering information on HARP refinance through Bank of America, they told me that Fannie Mae valued my home at $178,000 (a price tag I’ve never seen associated with my home since the housing crisis started). When I asked if this would disqualify me for the HARP program (because they might not technically consider me underwater at this value), they said no – you should be fine. But I’m skeptical that after I pay the mandatory $460 cash closing fee (the other $2540 rolls into the loan), that they would take the $460 and not approve me for the final paperwork.
In November of 2011, NY Times wrote a story on a report by Bloomberg News regarding the Fed Rescue.
The central bank provided emergency loans, asset purchases and other aid totaling roughly $7.8 trillion during a two-year period ending in March 2009, easily the largest component of the government efforts to bulwark the financial system.
This San Francisco Chronicle article, “HARP 2 Refinanice Plan to Boost Borrowers, Banks,” talks about the case of the 2nd mortgage.
Read NPR’s follow-up story about HARP Phase II. What are the critics saying about this revised program?
The White House says it will help millions of people hold onto their homes through a government-backed modification program. But critics are skeptical the plan will be a success, in part because of the dependence on the good will of banks to voluntarily join up.
“The fallout from the recession has cut deeply into the housing security, employment and income of many Americans. But some parts of the country are clearly faring better than others. Here, three interactive maps show foreclosure and jobless rates as well as household income by county.”
Housing, mortgages, foreclosure and refinancing.
Las Vegas, NV
Monday, October 24, 2011
“President Obama joined homeowners in Nevada to push for changes to the Home Affordable Refinance Program, also known as “HARP.” The President is asking Freddie Mac and Fannie Mae to loosen HARP restrictions, making it easier for property owners to refinance their home loans”