For the past couple years now, there has been a big push for a so-called HARP 3.0, which would essentially open the door to private-label refinances under the popular Making Home Affordable program.
Since inception, only Fannie and Freddie mortgages have been eligible, despite private-label mortgages accounting for more of the carnage that led to the housing crisis.
Still, such negotiations have always ended in an impasse, likely because investors don’t want to lose any money by giving homeowners who are able to make payments a break.
But that hasn’t stopped the Obama administration from fighting for such a program, despite it now being years since the crisis first reared its ugly head.
Will Eligibility Date for HARP Be Pushed Forward?
Apparently a bunch of mortgage executives met with White House officials last week to discuss the current situation in mortgage and housing.
And one official familiar with the talks told Inside Mortgage Finance that the Obama administration will “push hard” for HARP 3.0, that is, an underwater refinance program for non-Fannie/Freddie mortgages.
Unfortunately, there’s still a lot of doubt surrounding such a push, seeing that the bill would need to make its way through Congress before landing on Obama’s desk for signature.
As I mentioned, we are now years away from the height of the mortgage crisis, so convincing a bunch of lawmakers to ease payments for mortgagors now seems a lot less likely.
This would have made sense when housing was in the gutter, but now that everyone and their mother wants to buy a home, it doesn’t seem as promising.
Still, if HARP 3.0 doesn’t get the green light, there is still hope for an expanded HARP, which I refer to as “HARP 2.5.”
At the moment, the cutoff date to be eligible for HARP is May 31, 2009, meaning your mortgage must have been sold to Fannie Mae or Freddie Mac by that date.
If you took out a mortgage after that time, and your property plummeted in value, you’re essentially out of luck.
A possible extension would move the cutoff date to somewhere in 2010.
This extension isn’t a new idea – it was included in a bill put forth by Senators Barbara Boxer (D-CA) and Robert Menendez (D-NJ), known as, “The Responsible Homeowner Refinancing Act of 2013.”
However, that seemed to fall on deaf ears, and was about as popular as “The Responsible Homeowner Refinancing Act of 2012.”
Is It Just Too Late to Offer Relief?
I’ve covered this subject many times on this blog, largely because it keeps resurfacing. Or reHARPing, if you will.
Unfortunately, every time it does, more time has passed. And as more time passes, those who still remain current on their mortgages seem less a threat to default.
At the same time, home prices continue to march higher, meaning far fewer homeowners are actually underwater and in need of a HARP refinance.
Sure, home prices took a dive from 2010-levels, but prices have since climbed higher in most parts of the country. And they’re only expected to go higher from here.
So there’s a decent chance that many of these homeowners can now explore a traditional refinance, assuming they’ve made on-time payments and paid down some principal.
It seems housing officials are more concerned with homeowners who actually pose a threat to the recovery, which is why the Streamlined Modification Initiative, aimed at severely delinquent borrowers, was recently launched.
For those who can make their payments, there is little incentive to offer a lower mortgage rate, especially if the future appears bright.