Well, file this one under “was bound to happen,” or, “was only a matter of time.”
A clever guy by the name of Marcus J. from Clementon, New Jersey has created an online petition to eliminate the securitization cut-off date for HARP eligibility.
At the moment, this ever-important cut-off date is May 31, 2009, meaning if your mortgage was sold to Fannie Mae or Freddie Mac after that date, you’re not eligible for a HARP refinance.
Unfortunately, many homeowners already refinanced their mortgages under HARP, perhaps when it wasn’t as attractive as it is now, seeing that there is a much more flexible HARP 2 nowadays.
At the same time, mortgage rates have marched lower and lower since HARP was originally unveiled, again, likely frustrating homeowners who refinanced early on.
There are also the many people who purchased homes after that cut-off date, who are now underwater and likely seeking a HARP refinance.
Eliminate HARP Cut-Off Date?
The petition essentially calls for the elimination of the cut-off date, which Marcus J. refers to as “arbitrary,” along with the one-time HARP limit. This would allow for so-called “reHARPing.”
He argues that removing these roadblocks would permit millions of Americans to refinance their mortgages to lower rates, thus saving thousands on their monthly mortgage payments over time.
Note: You can reHARP a Fannie Mae loan that was refinanced under HARP from March to May 2009.
Interestingly, he isn’t the first to propose such an idea. Back in May 2012, U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) proposed extending the cut-off date an additional year to May 31, 2010.
That seemed to fall on deaf ears, so it’s unlikely a complete removal of this key date will be approved.
As much as it sounds like a good idea (maybe), it’s a bit of a slippery slope. If you remove the date, borrowers could just refinance over and over until they saw fit, assuming rates continued to fall.
And this isn’t a traditional refinance program – it’s essentially a loss mitigation tool for distressed borrowers, or those at risk of walking away.
A line has to be drawn somewhere, otherwise it would become something of a free-for-all.
Does the cut-off date deserve a second look? Absolutely; the FHFA should dissect the data to determine if extending it will provide a net benefit.
But removing the date entirely might be a bit extreme.
When it comes down to it, timing can be your best friend or your worst enemy, and we can’t rely on the government to extend the program every time rates drop, especially when there’s not even a refinance program for non-agency mortgages.
Ironically enough, you can blame the government for creating this situation, seeing that they simultaneously worked to push mortgage rates lower and lower long after HARP was released.
Petition Needs 25,000 Signatures
It will certainly be interesting to see if the petition receives the necessary 25,000 votes to at least “get a look.”
It’s currently available for online signature over at whitehouse.gov, which is the official website to have your voice heard.
At the moment, it only has 26 signatures, so an additional 24,974 are needed by February 8th, 2013 in order for an official review and response from the Obama administration.
Additionally, it needs at least 150 signatures to be publicly searchable on the website, meaning it’s got zero visibility right now.
If you’re interested, you can sign here.
Hi. Today you linked to my husband’s petition in your article. Thanks for posting it, and I wanted to let you know that the petition now has 244 signatures, in case you wanted to update your post.