Happy Fall! I hope everyone has been enjoying the beautiful weather and festive activities in the Tampa Bay area! The holiday season is right around the corner, and in turn, some exciting news has made its way to the surface in the real estate industry.

The word is out. The administration has finally acted on its promise to assist people in lowering their living expenses.

While the state of economy remains less-than-favorable, there is a rapidly growing consensus among Americans that the nation’s sub-par housing market is what’s holding back the economic recovery. Home values are hovering at 8-year lows and millions of homeowners owe more than their homes are actually worth.

Last week, the Home Affordable Refinance Program (HARP) was unveiled. Backed by The Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac, the program is intended to make it easier for lenders to refinance the mortgages of eligible borrowers. To explain the program simply, it has been broken down into two major parts:

Part 1:

First, they will allow unlimited loan to values in many situations. This means that homeowners will be able to refinance even if their home is “underwater.” This will help the thousands of homeowners in need of refinancing, but cannot not due to home values.

Part 2:

The second part of the program is a “relaxed plan” for the “representations and warranties” of a newly refinanced loan. This means that the new lender is going to receive protection from Fannie Mae and Freddie Mac for agreeing to buy and service this potentially “risky” loan.

With the lowest rates in recent history (near 4 percent), there could not be a better time for this type of program. You can create equity in your property by refinancing and then paying the monthly savings to principal. While HARP will not solve all of the problems within the housing market, it is an invaluable step towards the recovery of the housing market and economy.

Before you jump the gun, ask yourself these questions:

Am I Eligible?

Only borrowers whose loans are owned or guaranteed by Fannie Mae and Freddie Mac will be eligible. Additionally, borrowers must have taken out their loans before June 1, 2009, and have not missed more than one payment within the last year, and none in the past six months. The current loan-to-value ratio on the mortgage must exceed 80 percent, and having a mortgage that was previously refinanced under the program automatically disqualifies you from the program.

How Do I Take Advantage of HARP?

The first step towards taking advantage of this program is to find out if your mortgage is owned by Fannie Mae or Freddie Mac. If so, contact your lender that offers HARP refinancing.

When Do the Changes Go into Effect?

The FHFA is expected to publish all the final details before the end of this month. However, some borrowers may not be eligible to enroll in the program until the first quarter of next year.

Originally intended to reach up to 5 million people, the program has since fallen short reaching only 822,000, one tenth of the number of people who are underwater. If you are eligible for refinancing under HARP, contact your lender. For more questions about HARP or buying or selling a home, stay in touch with my blog or contact me with questions.

Brenda Wade
www.BrendaWade.com
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