The home page of the MakingHomeAffordable.gov says, “The Making Home Affordable Program (MHA) ® is to help homeowners avoid foreclosure, stabilize the country’s housing market, and improve the nation’s economy.”
Unfortunately, the program has not exactly lived up to its objectives.
To break it down
The website says that if you are not behind in making your mortgage payments but have been unable to get traditional refinancing because your home is worth less than you owe, you might be eligible to refinance your mortgage through the Home Affordable Refinance Program or a HARP. Again according to the website, this program was created to help you get a mortgage that would be more affordable. These loans do require an underwriting process, a loan application and refinance fees.
HARP part two
In an effort to make refinancing even more attractive, the FHA created a HARP2, which expands that criteria to include those existing mortgages that have Private Mortgage Insurance (PMI) and for homeowners who have equity of less than twenty percent in their homes.
A good idea that ‘s come up short
This seemed like a really good idea and does even sort of fulfill the strategy initiatives of “helping homeowners avoid foreclosure, stabilize the country’s housing market and improve its economy.” However, it has failed to help many of the homeowners now facing foreclosure. So what happened?
Cutting to the chase
To cut to the chase, the big problem is that many of the foreclosures are not for the kinds of mortgages described in the paragraphs above. They are for homes where the owners had products that came with high risks and that had been aggressively sold before the housing crash. This includes loans with prepayment penalties, adjustable-rate mortgages and what are called option ARM’s. If you want examples of how harmful these mortgage can be, look no further than Florida and Nevada as these are markets that are struggling with higher than average foreclosure rates and property values that have declined. The initiatives under MHA have not helped these homeowners because Option ARM’s can’t be refinanced under either HARP or HARP2 programs. What happened is that these mortgages were packaged together and then sold as private securities. They were not sold to either Fannie Mae or Freddie Mac and to be eligible to refi, your mortgage must be owned by one of these two entities.
You have to be part of the family
If you’re having a problem with your mortgage you won’t be able to get a refi under either of the HARP programs if it’s outside the Freddie or Fannie family. Sadly enough, there is just no broad-based refinance plan for mortgages outside of Fannie Mae or Freddie Mac.
So answer is
So the answer to the question should you refi or not will depend largely on who holds your mortgage. If you’re part of the Freddie or Fannie family, it might make a great deal of sense. If not, you’re out of luck – at least for now.
Help with other kinds of debt
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