Fannie Mae and Freddie Mac – the largest buyers of residential loans in the United States – have both recently stated that they will be revamping the HARP program (Home Affordable Refinance Program). HARP was originally introduced by President Obama in 2009 with the intention of helping homeowners with loans owned by either Fannie or Freddie refinance their existing mortgage to more favorable terms – up to 125% of the mortgage amount owed. This program was intended to allow homeowners to take advantage of the low-interest rates even though they were upside down on their mortgage.
Unfortunately, the program didn’t live up to expectations…. of the 5 million homeowners it was expected to help – less than 1/10th of this number actually took advantage – primarily due to appraisal values.
In an announcement made yesterday by Fannie & Freddie, they will be eliminated the “CAP” of 125% for any mortgages currently owned by either agency – this should open up the flood gates for the homeowners who couldn’t qualify before this change. This new guideline is set to take place November 15, 2011 – homeowners should definitely take advantage of this window of opportunity… especially with 30 years fixed mortgage hovering around 4%.