HARP 2.0 - The New Mortgage Plan

There has been a lot of hoopla regarding President Obama’s announcement of a revised mortgage program (Home Affordable Refinance Program – HARP) to assist underwater homeowner’s in refinancing.   There is a lot of misinformation about the program and what it aims to accomplish so I figured I would provide a few facts and insights about what HARP 2.0 is actually trying to accomplish and how it will or won’t work.

First, this is an EXISTING program that has been in place for the better part of two years.  Second, the program has nothing to do with helping homeowner’s who cannot afford their current home.  HARP was intended to assist homeowners who still qualify income and credit wise under normal and current mortgage guidelines.  However, because the value of their home may have declined precipitously they are unable to refinance due to loan to value restrictions.  For example, you bought a home with 20% down five years ago at a rate of 6%.   Current rates are at 4% or you wanted to refinance into a 15 year fixed at 3.25% to shorten the amortization term.  Unfortunately, current appraisals show the values in your neighborhood have declined enough to wipe out your equity and despite your initial large down payment, you now have a loan that has a 100% or more loan to value.    You are now unable to refinance.   HARP was put in place so these QUALIFIED homeowners can take advantage of lower interest rates.

Like most government programs, the original HARP program was not very effective only assisting around 800k homeowners.   The main reason the program didn’t work as well as intended was because all the interested parties didn’t come out to play as many of us in the industry predicted.    There were issues with second mortgages not agreeing to re subordinate behind a new mortgage.   Private Mortgage Insurers (PMI) were not agreeing to transfer the PMI policies to new mortgages.   Fannie Mae/Freddie Mac had loan level price adjustments that eroded the benefits by making it too expensive to refinance.  Finally, because banks were not absolved of the liability of refinancing higher LTVs, many lenders just refused to do the higher loan to value deals capping them at 105% loan to value  in most cases.

The new HARP 2.0 program is designed to remove some of the barriers that limited the program’s success the first time.  For example, LTV restrictions are being removed entirely and the “reps and warrrants” are being adjusted so lenders are not being held liable for following the rules of the program as designed.   Loan level price adjustments will also be removed so that the borrowers are actually able to get current market interest rates.  Further, the new program is actually going to encourage homeowners to take on shorter amortization loans this time instead of just refinancing to a 30 year fixed.   By putting these homeowners in shorter term loans, they will build equity much faster and pay much less over the life of the loan.  I believe what is actually going to happen is we will see a refinancing wave of borrowers going into 15 or 20 year mortgages instead of 30 year fixed rate loans.
At this point, the specific details of the program have not been released yet and are due out November 15th.  Then banks will have to make preparations for new refinancing deals so the program may not actually be available until December or even January.  Finally, your loan must be owned by Fannie Mae or Freddie Mac and originated prior to June of 2009.

My prediction is that this program will help many of the homeowners who fell through the cracks the first time around.  However, it still will not solve the housing problems we face because it is limited to Fannie Mae and Freddie Mac loans.  There are still several million home owners who are underwater who do not have loans currently serviced by Fannie Mae/Freddie Mac.   Until those loans are addressed, the housing market will continue to falter.

12 Easy Repair Jobs to Pamper Your Home

 

Stuck inside during these winter days? Take advantage of your indoor time by giving your home a few quick repairs.

Accomplishments — even little ones — go a long way toward a sunny outlook. Fortunately, there are plenty of easy, quick home repair chores you can do when you’re mired in the thick of winter. For max efficiency, make a to-do list ahead of time and shop for all the tools and supplies in one trip. On your work days, put the basics in a caddy and carry it from room to room, checking off completed tasks as you speed through them.

What to look (and listen) for

In each room, look around and take stock of what needs fixing or improving. Focus on small, quick-hit changes, not major redos. Here are some likely suspects:

1. Sagging towel rack or wobbly toilet tissue holder. Unscrew the fixture and look for the culprit. It’s probably a wimpy, push-in type plastic drywall anchor. Pull that out (or just poke it through the wall) and replace it with something more substantial. Toggle bolts are strongest, and threaded types such as E-Z Ancor are easy to install.

2. Squeaky door hinges. Eliminate squeaks by squirting a puff of powdered graphite ($2.50 for a 3-gram tube) alongside the pin where the hinge turns. If the door sticks, plane off a bit of the wood, then touch up the paint so the surgery isn’t noticeable.

3. Creaky floor boards. They’ll shush if you fasten them down better. Anti-squeak repair kits, such as Squeeeeek No More ($23), feature specially designed screws that are easy to conceal. A low-cost alternative: Dust a little talcum powder into the seam where floorboards meet — the talcum acts as a lubricant to quiet boards that rub against each other.

4. Rusty shutoff valves. Check under sinks and behind toilets for the shutoff valves on your water supply lines. These little-used valves may slowly rust in place over time, and might not work when you need them most. Keep them operating by putting a little machine oil or WD-40 on the handle shafts. Twist the handles back and forth to work the oil into the threads. If they won’t budge, give the oil a couple of hours to penetrate, and try again.

5. Blistered paint on shower ceilings. This area gets a lot of heat and moisture that stresses paint finishes. Scrape off old paint and recoat, using a high-quality exterior-grade paint. Also, be sure everyone uses the bathroom vent when showering to help get rid of excess moisture.

6. Loose handles or hinges on furniture, cabinets, and doors. You can probably fix these with a few quick turns of a screwdriver. But if a screw just spins in place, try making the hole fit the screw better by stuffing in a toothpick coated with glue, or switching to a larger screw.

Safety items

You know those routine safety checks you keep meaning to do but never have the time? Now’s the time.

7. Carbon monoxide and smoke detectors. If you don’t like waking up to the annoying chirp of smoke detector batteries as they wear down, do what many fire departments recommend and simply replace all of them at the same time once a year.

8. Ground-fault circuit interrupter (GFCI) outlets. You’re supposed to test them once a month, but who does? Now’s a great time. You’ll find them around potentially wet areas — building codes specify GFCI outlets in bathrooms, kitchens, and for outdoor receptacles. Make sure the device trips and resets correctly. If you find a faulty outlet, replace it or get an electrician to do it for $75 to $100.

Another good project is to replace your GFCIs with the latest generation of protected outlets that test themselves, such as Levitron’s SmartlockPro Self-Test GFCI ($28). You won’t have to manually test ever again!

9.  Exhaust filter for the kitchen stove. By washing it to remove grease, you’ll increase the efficiency of your exhaust vent; plus, if a kitchen stovetop fire breaks out, this will help keep the flames from spreading.

10. Clothes dryer vent. Pull the dryer out from the wall, disconnect the vent pipe, and vacuum lint out of the pipe and the place where it connects to the machine. Also, wipe lint off your exterior dryer vent so the flap opens and closes easily. (You’ll need to go outside for that, but it’s quick.) Remember that vents clogged with old dryer lint are a leading cause of house fires.

11. Drain hoses. Inspect your clothes washer, the dishwashers, and the icemaker. If you see any cracks or drips, replace the hose so you don’t come home to a flood one day.

12. Electrical cords. Replace any that are brittle, cracked, or have damaged plugs. If you’re using extension cords, see if you can eliminate them — for example, by replacing that too-short lamp cord with one that’s longer. If you don’t feel up to rewiring the lamp yourself, drop it off at a repair shop as you head out to shop for your repair materials. It might not be ready by the end of the day. But, hey, one half-done repair that you can’t check off is no big deal, right?

source: houselogic.com