The Anna Maria Island Sun Newspaper

Vol. 12 No. 5 - November 16, 2011


Harp 2.0 offers a new way to refinance

Another day, another attempt by the federal government to resolve the never ending housing crisis. Is it just more smoke and mirrors or does this latest refinance program have enough teeth to finally take a bite out of the real estate downturn apple?

On Monday, Oct. 24, the Obama administration announced its plan to revamp the existing Home Affordable Refinance Program, which has been in effect for two years. The new plan, dubbed HARP 2.0, is hoping to offer the oversupply of homeowners who are unable to refinance a way to do so.

The overhauled plan will allow borrowers to refinance regardless of how far their homes have fallen in value. This eliminates previous limits based on the amount of equity in the home and presumably will open up refinancing to those previously boxed out. For example, there are millions of homeowners who are paying higher interest rates than are currently available, but are underwater, owing more than their houses are worth and who would not otherwise qualify for refinancing.

In addition, the plan will reduce or eliminate bank fees for refinancing and streamline the process. Since the appraisal process is currently one of the biggest problems in getting a property to qualify for refinance, that step is being eliminated, as well as much of the extensive underwriting requirements. Homeowners need to be current on their previous six mortgage payments and also must have mortgages that were backed by Fannie Mae and Freddie Mac. The program is open to those owing up to 125 percent of their home's value.

The new plan has the potential of helping homeowners benefit from a lower interest rate, 4.11 percent for a 30-year, fixed-rate mortgage as of this writing, who have basically good credit and would typically qualify for a refinance, but cannot because their home is underwater. The administration's position is that helping this group of homeowners will result in eliminating future foreclosures by putting more money in the pockets of homeowners and discouraging strategic defaults. It, of course, does nothing for homeowners who are currently delinquent on mortgages or mortgages that are not backed by Fannie and Freddie.

One of the major obstacles to the program's success is getting the banks to refinance negative equity properties. It's unlikely that Congress can or will mandate that lenders cooperate, not to mention the possible negative impact to investors who purchase mortgage backed securities.

The final details including costs will not be published until mid-November with lenders starting to refinance loans as soon as Dec. 1. The program's expiration date is the end of 2013, extended from the original of June 2012. Early next year the current limit of 125 percent of the property's value will be lifted, allowing homes that are even further underwater to qualify for a refinance.

Since the country has never really lived through this type of housing downturn, everything the government tries is pretty much an experiment. In previous real estate downturns, just lowering the interest rates would prop up the economy by freeing up cash to those who refinanced. However, because of all of the underwater homes and homeowners' inability to qualify for mortgages, it doesn't seem to matter how low the rates fall.

Is it too little, too late as many in the mortgage industry feel or is it the silver bullet that will finally hit its target? All we know for sure is that it's another day and another plan.

Real Estate Transactions
Real Estate Transfers from October 1 to 15, 2011
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

10/05/2011 1,400,000 1,325,000 807 N. Shore Drive 675 2 Br/1 Ba Condo, Short Sale

Bradenton Beach

10/12/2011 199,000 155,000 1325 Gulf Drive North 230 2 Br/1 Ba Condo, Short Sale
10/07/2011 150,000 160,000 1603 Gulf Dr. N. # 8 540 1 Br/1 Ba Condo


10/11/2011 424,000 380,000 3860 Mariners Way, 424B 2156 3 Br/2 Ba Condo
10/02/2011 425,000 385,000 12124 45th Ave. Drive 2378 61x290 3 Br/2 Ba SFR

Holmes Beach

10/13/2011 419,000 400,000 324 64th St. 1344 3 Br/2 Ba SFR
10/07/2011 599,000 535,000 520 72nd St. 2647 95x117 2 Br/2 Ba SFR
10/04/2011 599,950 600,000 202 75th St. # A 1967 4 Br/2 1/2 Ba SFR
10/04/2011 380,000 350,000 207 77th St. 1070 2 Br/2 Ba SFR
10/14/2011 425,000 375,000 4108 Sixth Ave # 2 1677 3 Br/3 Ba Condo
10/07/2011 598,000 500,000 3302 Sixth Ave # 1 3000 100x100 8 Br/8 Ba Inc.

Source: Manatee County Property Appraiser’s Office

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