Refinance Program to Allow LTV Up to 125 Percent

July 1, 2009 No Comments »


As expected, more underwater borrowers will be able to take advantage of the Obama Administration’s Home Affordable Refinance Program (HARP), with loan-to-value ratios up to 125 percent now considered acceptable, according to HUD.

“I am pleased Secretary Donovan accepted my invitation to come to Nevada and see firsthand the challenges homeowners here are facing,” said Senate Majority Leader Harry Reid (D-NV), in prepared remarks.

“His announcement that the loan-to-value requirement for the Administration’s refinance program has been raised to 125 percent is good news for Nevadans fighting to stay in their homes.”

The city of Las Vegas leads the nation in rate of foreclosure and more than two-thirds of its current mortgage holders are underwater, meaning they have home loan balances that exceed their current property values.

Previously, only borrowers whose loan-to-value was 105 percent of lower could qualify for assistance via the HARP, meaning a mortgage could not exceed $210,000 if the property was now worth just $200,000.

Now that same borrower’s mortgage balance could be as high as $250,000, meaning help for that many more struggling homeowners.

This also reveals the growing desperation to curtail foreclosures and buoy falling home prices; of course, the program may need to be further expanded to help borrowers even deeper in negative equity, though you could that these homeowners are too far gone to benefit.

Since February 18, 200,000 borrowers have received offers for trial loan modifications under the Making Home Affordable program and “ten of thousands of refinances and trial modifications are under way.”

Tip: How to refinance with negative equity.

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