Federal loan program can help underwater homeowners

First Posted: 3/11/2014

LIMA — Homeowners under water on their mortgages can still take advantage of a federal program to refinance, lenders are reminding the public.

The Home Affordable Refinance Program allows people to refinance a mortgage even when they owe more on their homes than it’s currently worth. The mortgage must be guaranteed through either Freddie Mac or Fannie Mae, and the home must be a primary residence with a loan financed on or before May 31, 2009.

“It’s an opportunity for homeowners who have experienced a decline in property value through no fault of their own,” said Huntington Bank Executive Vice President of Mortgage and Consumer Lending Jay Plum.

HARP refinances have declined, as have all refinances, as the market has improved; they were both at their peak when mortgage rates were at unprecedented lows.

Today, however, mortgage rates remain below 5 percent, still at all-time lows, and the HARP program ends Dec. 31, 2015.

“They recently extended the program, but it does have a time limit,” said Amy Blankemeyer, loan operations manager for The Union Bank. “If you haven’t refinanced through the program, there is still time to do so. I think the public isn’t aware of the program as they should be, or could be.”

Lenders say a good first step is to check with your mortgage holder. Homeowners can also check online with Fannie Mae and Freddie Mac to see if their mortgages are guaranteed by them.

When rates dropped so low, many homeowners refinanced on their own. But traditional refinances require a home to be worth at least what is owed. This program recognized that the housing crisis harmed homeowners who didn’t do anything wrong.

“You had a good payment history, you played by the rules, did the right things, and through no fault of your own, property values dropped,” Plum said. “Under traditional rules, you couldn’t take advantage of those low rates, and this gives flexibility to better a situation and not worry about loan to value and get a lower payment with a lower rate.”

The local housing market is improving, and rates are starting to increase, but they remain low, especially when compared with historical averages.

“You know, I bought my first home in 1995, and my rate was 7.4 percent, and I thought I got a really good rate at the time,” Blankemeyer said. “The rates today are still near all-time lows.”

HARP refinances are declining along with all refinances as rates increase. However, HARP refinances are increasing as a percentage of all refinances, according to the Federal Housing Finance Agency. Since the beginning of the program, more than 3 million homes have been refinanced through HARP.

The program is getting especially high usage in places across the country with hard-hit real estate markets. For example, through the end of 2013, HARP refinances represented 54 percent of all refinances in Nevada and 48 percent in Florida. HARP accounts for 22 percent of the total refinances nationwide.

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