HARP – Great tasting Irish lager but……….

A few weeks back I mentioned that Obama was planning to expand the Home Affordable Refinance Program (HARP).

Well the announcement came out yesterday and it is official. HARP has been extended through 2013 and expanded so that those who are well beyond the old 125% LTV cutoff can now apply. No matter how much value their home has lost as long as they are backed by Fannie Mae or Freddy Mac and were obtained before March 31, 2009 they have a shot.

Should be a ray of hope to the 40% or so estimated homeowners in the Phoenix area who are underwater on their homes. With rates hovering around 4% this could free up a few hundred bucks a month. I’m sure hundreds of thousands or more will benefit. Some feel that this could help to stabilize the market by reducing the number of people that walk from their homes adding  to the glut of value-stifling foreclosures.

Others including myself aren’t as optimistic because the government has failed in every other attempt to stem the tide. Without  lenders espousal the traction just won’t be there. And they’ve been very reluctant to cooperate in the past.

Don’t get me wrong, I’d love to see something have an impact but it will take much more than what this program has the potential to deliver. Estimates have up to 4 million homeowners being eligible. With only 900,000 helped during the first incarnation of HARP why should we expect anything different this time?

Something else to consider. If someone is thinking about walking because their loan is 150% or so of the current value of their home a few dollars a month may not mean much in the whole scheme. These people would be held virtual hostage by their lopsided loans not being able to sell for a long time.  It would seem that in cases like this a principal reduction would have to be part of any deal to keep them in the game.

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