HARP 2.0 is Kicking Into Gear

Filed in HARP Program Updates by on March 28, 2012 1 Comment

Ever since HARP 2.0 was announced by the Obama Administration back in November, underwater homeowners have been waiting to see if the program would provide much needed relief in the form of lower monthly home payments. Nearly four months later, it appears that HARP 2.0 is kicking into gear.

The new version of HARP is supposed to allow people to refinance at today’s low mortgage rates regardless of how much negative equity they have. HARP 1.0 was supposed to be available to those who had loan-to-value (LTV) ratios of less than 125%, but in practice many lenders were only willing to refinance those with LTVs of 105% or less.

Traditionally, lenders were not willing to refinance people whose mortgages were underwater due to the increased risk of default. In the wake of the housing bubble, home values declined by a third on average, which resulted in record numbers of people with negative home equity. According to the most recent reports from CoreLogic, approximately 22% of homeowners with mortgages are underwater, and another 5% have near-negative equity (0-5%).

While some lenders are still imposing a maximum LTV cap on HARP 2.0 loans, there are reports that some are allowing unlimited LTV refinancing.

Whether or not HARP 2.0 will be successful remains to be seen. Its impact is largely dependent upon the cooperation of big banks, which has not always been forthcoming for other housing plans introduced by the Obama Administration. If successful, the new HARP mortgage program could help millions of underwater homeowners lower their monthly housing bills.

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  1. LORI says:

    I fully qualify for harp 2.0 according to the guidelines with freddie mac and have talked to 4 lenders from the freddie mac website who are participating. Everyone of them has denied me, from not having equity in my home, to not having a bankruptcy 3 years old, mine is 26 months old. No missed or late payments on my mortgage, they are quoting interest rates at 4.5 APR or more. What a joke. Again the banks are doing what they want, adding fees, higher interest rates and adding their own qualifications on top of the 2.0 guidelines.

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