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Underwater Borrowers to Get Help

Underwater Borrowers to Get Help

In attempt to boost the sagging housing market, the Federal Housing Finance Agency (FHFA) announced changes October 24, 2011 to the Home Affordable Refinance Program (HARP).  HARP began in 2009 and is intended to help qualified homeowners who are “underwater” or who owe more than their homes are worth to refinance their mortgages at lower rates. The FHFA said it wanted to focus on people who took out loans between 2004 and 2008, with interest rates of 5%. Currently a typical 30-year loan, the most common in the US, is charged at 4%.

Adjustments to HARP will allow some homeowners who were ineligible under the old rules to participate. Borrowers who owe more than 125 percent of what their property is worth had been unable to participate, but that cap will soon be eliminated. In addition, some closing fees will be cut and appraisal requirements eased.

To be eligible, the borrower must have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, sold to those agencies on or before May 31, 2009.  The loan-to-value ratio on the mortgage must be greater than 80 percent. Borrowers cannot have missed any mortgage payments in the past six months and cannot have had more than one missed payment in the past 12 months. Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances. The FHFA is expected to publish final changes in November, but timing will vary by lender. The program expires at the end of 2013.

Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:

Other Resources

Books about Debt, Refinancing and Foreclosure

An insider’s guide to refinancing your mortgage : money-saving secrets you need to know by David Reed, 2009.

  The foreclosure survival guide : keep your house or walk away with money in your pocket by Stephen Elias, 2011.


Solve your money troubles : debt, credit & bankruptcy by Robin Leonard, 2011.


- Terri Tortorici May, Librarian, Gig Harbor Library

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