Home Affordable Refinance Program Surges: HARP Mortgage Reduction

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Home Affordable Refinance Program Surges: HUD Housing Scorecard shows HARP's success in helping homeowners maintain long-term mortgages reductions.Home Affordable Refinance Program Surges In July with long-term success

Backed by the Department of Housing and Urban Development, HARP mortgages offer the borrower the ability to buy a Minneapolis home with as as little as 3% down payment. With the right circumstances, homeowners can even finance “allowable” closing costs. Seller can contribute up to 6% of the purchase price to the buyer towards closing costs. HOPE NOW proprietary loan modifications increased in May, growing to about 45,100 modifications from around 43,000 modifications in May. HARP refinances skyrocketed from 49,500 in April to 67,500 in May.

Foreclosure Starts And Completions Declined

On August 3,2012, The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury released the July edition of the White House Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the Housing Scorecard shows continued signs of recovery as foreclosure starts and completions declined in June, though officials expect activity to increase in the coming months as firms lift delays in foreclosure processing.

HARP Lessens Risks for Fannie Mae and Freddie Mac

At a policy discussion meeting Lawrence Katz commented on HUD's recent study of impacts on housing related to employment, education, health, and delinquency, among other housing topics. The National Bureau of Economic Research conducted the study for HUD. Elisabeth Allison Professor of Economics at Harvard University and NBER Research Associate, Lawrence Katz, were the principle investigators. When asked about rencent changes to HARP, Katz responded, "Recent changes have indeed been made to HARP. The changes are designed to help more underwater borrowers who are current on their mortgages refinance at today's low interest rates. Not only will these changes allow more borrowers to qualify, but they will also streamline the process and reduce the cost to borrowers. It should also lessen the risk for Fannie Mae and Freddie Mac".

Signs Of Housing Recovery in the Twin Cities

In addition, the inventory of houses for sale remained low; at current pace, it would take 6.6 months to sell the supply of existing homes on the market and 4.9 months to clear the new homes on the market. Experts consider a six month supply of homes to be a balanced market. Distressed sales remain a key factor, however, as the impact of serious delinquencies and underwater mortgages continue to temper market gains.

HAMP Helps Homeowners Maintain Mortgage Payments For The Long Term

“HAMP continues to offer the deepest and most sustainable assistance available to prevent foreclosure. Homeowners in the program have a high likelihood of successfully overcoming their financial hardship and maintaining their mortgage payments for the long term,” said Treasury Assistant Secretary for Financial Stability Tim Massad. “We remain committed to utilizing the tools we have available to help our country heal faster from an unprecedented crisis.”

“This month’s indicators show momentum not seen since before the housing crisis as refinances through our enhanced Home Affordable Refinance Program continue to surge - HARP loans represented 20 percent of total refinance volume in May, the largest increase since the program was launched in 2009. But with so many households still struggling to make ends meet, it’s clear that we have more work ahead.” ~ HUD Acting Assistant Secretary Erika Poethig

HAMP's Long-Term Success Helping Homeowners

HUD's report offers details on how homeowners in HAMP continue to demonstrate long-term success in the program. Tabulated stats from the end of June show:
* more than one million homeowners have received a permanent HAMP modification
* individually saving approximately $537 on monthly mortgage payments
* savings on a national level total $13.9 billion
* 75% of homeowners with non-GSE mortgages benefitted from principal reduction with their HAMP modification
* distressed property sales accounted for 24% of all re-sales in May, down from a revised 26 percent in March and down from 29% the previous year
* 86% percent of homeowners starting the program in the last two years have received a permanent modification.

The report points to HAMP modifications long-term success by stating that they "continue to exhibit lower delinquency and re-default rates than private industry modifications, with 94 percent of homeowners still current on their modified payments after six months".

DeMarco Believes HAMP's Long-Term Successes Is At Risk

DeMarco's has remained strong in his leadership of the FHFA, standing at odds with The Treasury Department recently. He believes proposing a broad sweep of mortgage principal reductions would be have negative impact on taxpayers and mortgage markets. He stated, "Longer-term, this view could lead to higher mortgage rates, a constriction in mortgage credit lending or both, outcomes that would be inconsistent with FHFA’s mandate to promote stability and liquidity in mortgage markets and access to mortgage credit".

Excellent Time to Get A HAMP Loan

Long Term Guidance from mortgagenewsdaily.com states they "continue to advocate against trying to 'get ahead' of current market movements due to the high degree of uncertainty. In the past, we would have interpreted that advice as a suggestion to lock, but in the recently 'low and sideways' environment, it's probably better-read as a suggestion to go with the flow of gradually lower rates until we see the pattern definitively break. It's a reasonably safe assumption that European concerns will generally continue to apply downward pressure on rates although there are no guarantees that the right piece of news or economic event couldn't mark 'the turning point' at which rates bottom out. On any given day, rates have been at or near all-time lows and in the grand scheme of things, unable to move lower as quickly as Treasuries for example. So although there is potential gain from floating, it's still a historically excellent time to lock if you'd prefer to take the risk off the table".

FHA Short Refinancing

Federal Housing Administration (FHA) Loans FHA Streamline Refinancing: As of June 11, 2012, HA lowered its Upfront Mortgage Insurance Premium (UFMIP) to just .01 percent and reduced its annual premium to .55 percent for FHA borrowers who wish to refinance. To qualify the mortgage must have been endorsed on or before May 31, 2009. Borrowers may contact their lender directly to inquire about eligibility. FHA Short Refinancing: Helps current homeowners who can’t refinance because they are underwater. FHA short refinance loans require a loan application and that borrowers satisfy other eligibility requirements.

If you are struggling to make your monthly home payments, there is help in the Twin Cities available. If you determine that a smaller or less expensive home would suit your future needs best, call me at 612-396-7832.

Jenna Thuening, a Jenna Thuening, owner of Home Destination Residential Realtor helps homeowners learn about the Home Affordable Refinance Program

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