Obama Considering HARP for Non-Agency Borrowers

This is for all the responsible homeowners out there who are current on their mortgages but have been unable to refinance because they could not qualify for the HARP program because their mortgage is not owned by Fannie or Freddie. President Obama is considering announcing a major expansion of the HARP 2.1 refinancing program in his upcoming State of the Union speech that would make it possible for underwater borrowers whose loans are not held by Fannie Mae or Freddie Mac to refinance at today’s low rates.

The Washington Post, citing Treasury Department sources reported this morning that the President is weighing whether to use his executive powers to expand the program to include non-agency loans in the successful refinancing program. Congress refused to approve such an expansion of the program last year.

HARP has helped about 1.8 million homeowners refinance since April 2009.  Some 81,600 borrowers used the HARP program to refinance last month alone, according to HUD.  Some 11 million homeowners have been unable to refinance under HARP.

The HARP program, which has been modified a number of times since its launch four years ago, is limited by that fact that borrowers’ loans must be held by one of the government sponsored enterprises, Fannie Mae or Freddie Mac.  As a result, it has not been able to help millions of homeowners.

“Even with the expanded HARP 2.0 guidelines, we are still finding that 4 out of 10 borrowers we speak with are unable to qualify for a refinance due to participating lender restrictions,” said Brian Maier, a Las Vegas, NV mortgage broker last July.

The plan, if adopted, would likely be aimed at homeowners who have otherwise kept up with their mortgage payments but have been unable to refinance because the loan against their home exceeds its depressed value. Many Republicans in Congress have balked at the idea amid concerns over the cost to taxpayer, according to the Post.

In his State of the Union Speech last year the President proposed an expansion of the HARP program that would provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.  However, the plan required action by Congress, which failed to materialize.

The Post reported that Michael A. Stegman, a senior Treasury Department official, said late last month that the administration would “consider non-legislative means at our disposal to help responsible . . . homeowners access these low rates.” But he added, “the legislative route would be preferable.”

In an editorial last week, the New York Times said, “The program demonstrates a clear contrast with Republicans, both in Congress and on the presidential campaign trail. Many, including Mitt Romney, want the government to do nothing to help homeowners on the verge of foreclosure. That should not stop the White House and other Democrats from vigorously making the case that there is an alternative to that coldhearted prescription, if lawmakers would just seize it.”

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One Response to Obama Considering HARP for Non-Agency Borrowers

  1. Teresa says:

    I sincerely hope that they pass HARP 3 soon. We’ve been trying to refinance for two years with no luck. The only things holding us back are not having freddie or fannie loan and high LTV. I just don’t understand why the people who show the ability to repay their loans are being left out in the cold. If nothing else why can’t our own bank who carries our mortgage give their good customers a one time interest rate reduction option. Is that really to much to ask? There is absolutely no risk to the bank as the funds are already out there and they are not extending any new credit. Why is that so hard to grasp. The economy needs a boost and this would help do it.

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