Same old song from HARP?

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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 For more about my company, visit

About Ron Ricchio

Renato (Ron) Ricchio is president of Chicagoland Home Mortgage. He grew up in Westchester and attended St. Joseph High School and DePaul University, taking a job as a loan officer in the mortgage industry soon after graduating with a bachelor's in finance in 1991. He started his own company in 2001, which he operates today. He has been ranked in the top 150 loan originators in 2010 and 2011 by Origination News. Ron is happily married with three beautiful children. A board member of San Francesco Di Paola Society and the founder of Ricchio Family Toy Drive for Lurie's Children's Hospital, he enjoys cooking and spending time with family and friends.

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