The FHFA Wants More Americans to Hop on the HARP & HAMP Train.

The FHFA Wants More Americans to Hop on the HARP & HAMP Train.  In a recent speech, Mel Watt, Director of the FHFA stated that the government will encourage those who have not yet taken advantage of the HARP and HAMP programs to take action.


MelW4-602x368Contact: Brittany Williams


Broadview Mortgage – Katella Branch

(714) 464-2945


Mel Watt, director of the Federal Housing Finance Agency (FHFA) recently announced his intent to encourage more homeowners to participate in the Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP) currently in place.  His initiative to urge homeowner involvement commenced with a ‘town hall’ style meeting in Chicago, IL where Watt joined experts and community leaders.  Prior to when Mel Watt was inaugurated as the Director of the FHFA in January 2014, the public speculated that he would expand the HARP program (from HARP 2.0 to HARP 3.0) so that more homeowners throughout the nation could be eligible.  In a past article entitled, “Federal Housing Finance Agency (FHFA) Expected to Release HARP 3.0 in 2014” speculation detailed that, “the most significant element of HARP 3.0 is that is its presumed to allow non-Fannie Mae/Freddie Mac loans to be HARP eligible.  This may include Alt-A, subprime, jumbo, and bank-held loans.  The revision is very significant.  Over 90% of today’s mortgage loans are originated by Fannie Mae or Freddie Mac, but this was not the same pattern for home loans from the year 2001-2007.”  Instead of performing the expected expansion on HARP’s eligibility limits, The Wall Street Journal notes that Watt took his decision in a different direction; “he put the kibosh on that idea in a speech at the Brookings Institution saying that [the expansion] would help only a small number of borrowers”.  In other words, as of now we cannot count on any expansion of the HARP program.

As is, the HARP program requires that the mortgage loan is owned or guaranteed by Fannie Mae or Freddie Mac and had been sold to these GSEs on or before May 31st, 2009.  The loan-to-value (LTV) of the loan must be over 80%, and the borrower must be current on the mortgage with good payment history in the past 12 months at the time of the refinance.  The HARP program allows homeowners who are responsible and on-time with their mortgage payments to refinance even if they have negative equity on their homes. The HAMP program as is requires that the borrower have a financial hardship, obtained their mortgage on or before January 1st, 2009, and owes up to $729,750 on their primary residence or one-to-four unit rental property.  HAMP works to reduce monthly payments by extending loan terms, lowering interest rates and reducing principal.  Similar to the HARP Program, HAMP borrowers must have their mortgage owned, insured, or guaranteed by Fannie Mae or Freddie Mac.  HAMP borrowers are also eligible with loans owned, insured, or guaranteed by the FHFA, Veterans Affairs, or the U.S. Department of Agriculture (USDA).  HAMP is aimed to minimize foreclosures and stabilize neighborhoods and home values throughout the U.S.  The FHFA announced that HAMP would be extended for one more year through 2016.  HARP applications will continue through the end of 2015. U.S. Treasury Secretary, Jacob Lew, stated, “These new actions will help provide more affordable options for renters, assist homeowners facing foreclosure or juggling bills to pay their mortgages and expand access to credit for prospective borrowers” (Southern Daily Press).

Both programs have been around for over 5 years, which leads people to wonder if encouraging more homeowners to participate now is even worth it.  The Wall Street Journal tracked the performance of both programs:  By the end of Q1 2014, the HARP program had completed 3.1 million refinances.  In comparison to historical data, “in the first quarter, lenders completed 77,000 refinances.  That compares to 115,000 in the fourth quarter of last year and a whopping 294,000 in last year’s first quarter”.  The numbers indicate that as the clock is ticking, the HARP program is losing traction.  The HAMP program simply never picked up as much as the HARP program did.  Through April of 2014, over 1.3 million homeowners received HAMP loan modifications according to the Treasury Department, but “for the past year, starts of new permanent modifications have inched along between 10,000 and 15,000 per month”.  These statistics demonstrate that the HAMP program might need a bit more momentum as well.

Mel Watt recognized that perhaps many are not applying because they are weary of the HARP and HAMP scams out there.  Many homebuyers are either not aware of the programs and how they work, and others think that they require hefty costs associated with the process.  The government wants to target these homebuyers specifically, and show them that extra costs defeat the purpose of the programs in the first place.  The Mortgage Reports notes, “as part of an outreach program geared at reaching HARP-eligible households, the Federal Housing Finance Agency has published a state-by-state tally showing the number of HARP-eligible mortgages”.  California is among the ten most HARP-ready states as it still holds as many as 34,196 eligible HARP loans that borrowers have yet to claim.  The HAMP program also requires extensive documentation to ensure that borrowers are eligible.  Borrowers claimed that lenders lost their paperwork and lenders claimed that borrowers typically submitted incomplete forms.  The Wall Street Journal contends that in July 2014, “SunTrustBanks Inc.agreed to pay up to $320 million for mishandling HAMP applicants.  Government attorneys say other lenders are also being investigated”.  Could it be that the lenders were not doing their justice with the HAMP Program?

Regardless, these programs have made a significant difference in the housing market thus far.  HousingWire contends “more than 2.6 million of these [foreclosure prevention] actions have helped troubled homeowners stay in their homes, including 1.6 million permanent loan modifications”.  The article goes on to state that the amount of Fannie Mae and Freddie Mac seriously delinquent borrowers dropped 8% during the first quarter of 2014.  Current mortgage rates are low, and it is a wonderful time to refinance.  Dan Green of The Mortgage Reports has noted that, “the typical HARP refinance now saves homeowners more than 30% annually on their mortgage”.  For more information on the HARP and HAMP programs, go on www.makinghomeaffordable.gov.

Broadview Mortgage values the opportunity to educate consumers to understand which direction that their current or future mortgage is taking them in.  If you have any questions about the information herein, feel free to reach out to the Author, Brittany Williams, at Brittany.williams@broadviewmortgage.com .  If you would like a quick pre-approval click here, and for assistance with down payment or buyer assistance, click here.  You are also always free to give us a call toll free at (855) 692-7623.

Since 1988, Broadview Mortgage has distinguished itself through honest business relationships with clients, loyalty to employees, and commitment to empowering and educating those communities.  Broadview Mortgage is a mortgage banker and direct lender made up of loan officers with years of experience in the firm and sheer excellence in customer service. The firm works to explore several financial solutions from which it’s clients may choose.  Business is initiated and conducted on a word-of-mouth basis.  Broadview Mortgage is a delegated underwriter for the Federal Housing Administration (FHA), the Veterans Administration (VA), and the Federal National Mortgage Association (FNMA).  Broadview is also approved to participate in several state, county and city programs for First Time Home Buyers.

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