Christmas might be coming early for homeowners in Oregon and Washington! The Obama administration has been putting pressure on banks to come up with ways to extend opportunities to refinance into lower rates in recent months, and it appears that we’re getting some movement on this finally. The original HARP loan (aka: Home Affordable Refinance Program) has been around since early 2009, and allows homeowners to refinance their existing first mortgages into lower rates, EVEN if the value of the securing property has gone down dramatically. The program allows you to borrow 125% of the appraised value of the home, but most major lenders only really allow for 105%. A great program all around, however – all Obama can do is have FNMA create the guidelines, but lenders still have to deliver the program based on those guidelines (FNMA is NOT a lender, but buys loans from banks). Many have been disappointed with the final numbers, the government thought that millions of families would benefit from this program, but since its come out, only eight hundred thousand or so of these HARP loans have been written. Given the current economic environment, Obama wants to remove as many barriers as possible for homeowners to access the savings and stability these low rate mortgages provide…. enter “HARP 2”.
HARP 2 is supposed to completely get rid of any value requirements. We’ll see if lenders jump in on this program. I know of a dozen people off the top of my head that would benefit greatly from being allowed to lower their payments, get out of an interest only program and start the process of their own debt to equity improvement program. Early indications are promising that this program will become available to borrowers trying to refinance underwater homes in Portland very soon.
In another area that has been recently restricted, we’re seeing indications that FHA loan limits will return to their former glory in coming days/weeks as well. FHA loan limits were reduced this fall from $417,000.00 in our market to $362,500. This is great news for any FHA loan holder who would benefit from an FHA streamline loan. Right now, if your current loan is greater than this new FHA max allowable, you are stuck with what you’ve got (shy of cutting a big check at close). With rates being at these amazing low levels, just about all FHA borrowers can be benefiting from a streamline. Hang in there! Help is on the way!!