Same old song from HARP?

Well, Fannie Mae and Freddie Mac promised the world and delivered far, far less.

Finally released in March, the Home Affordability Refinance Program (HARP) was supposed to facilitate refinancing among borrowers who are “underwater” (when the home is worth less than the outstanding mortgage). What we are seeing is that, unless you can walk on water, it will be hard to qualify for these loans.

Fannie Mae and Freddie Mac have said that they will purchase these loans from banks, but not all banks are welcoming the program with open arms. Banks are saying that these loans are risky and that they could potentially be liable to buy these loans back from Fannie Mac and Freddie Mac.

The result? The homeowners that are really struggling and could benefit from the refinance are being denied.

For example, I had a homeowner that had great credit, had been making his mortgage payments on time, and could have reduced his payments by $230 per month had he been able to refinance. Fannie Mae came back and said that he was over the qualifying ratio and was denied.

Does that make any sense? So instead of getting a rate in the 4s he will be stuck at his current rate of 6 percent. How is that helping this homeowner?

Don’t get me wrong, there have been people who have been able to use this program and refinance to a lower rate, but the number of people that it will help is far less than all the estimates that the government projected.

So what else is new?

Feel free to e-mail me with questions at ron@ronmortgage.com. For more about my company, visit www.ronmortgage.com.