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5.6 More Homeowners Have Potential to Qualify for Home Affordable Refinance

Date:July 1, 2009 | Author:Katie Curnutte | Category:HARP

Good news for underwater homeowners who owe more than 105% of the current value of their home: Fannie Mae and Freddie Mac will now refinance conforming mortgages with a loan-to-value ratio of up to 125%, under the Home Affordable Refinance Program (HARP). According to our analysis of the Q1 Zillow Real Estate Market Reports, that means up to 36% of all homeowners with mortgages, or 20.1 million households, could now potentially qualify for the plan.

Until HUD Secretary Shaun Donovan’s announcement this morning, only homeowners with conforming loans who owed between 80% to 105% of the value of their home qualified, which could have reached up to 26% of all homeowners with mortgages (read our original info on Making Home Affordable from last March). With today’s announcement, that’s 5.6 million more homeowners who could qualify.

Of course, not all of these loans are backed by Fannie Mae or Freddie Mac, a necessity to qualify for the HARP loan program. Information on which loans are backed by Fannie or Freddie isn’t publicly available, so we can’t calculate those numbers. (Check if your loan is backed by Fannie or Freddie here).

According to Bloomberg, Fannie and Freddie have so far refinanced 80,000 mortgages through HARP.

The HARP refi is now for homeowners with a conforming first mortgage backed by Fannie or Freddie who owe between 80-125% of the value of their home. There is also a loan modification program, called Home Affordable Modification Program (HAMP), that may help those homeowners who don’t qualify to refinance, but may be at risk of losing their homes to foreclosure.

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Responses (15)

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Matt Carter 9:35 AM - Jul 2,2009

I guess this raises the question of what about the other 64 percent? Are most of the borrowers in that group below 80 percent LTV? How many are above 125 percent LTV?
Matt Carter 1:23 PM - Jul 2,2009

Looks like only 20,000 of those 80,000 refis Bloomberg reported on had LTVs above 80 percent…
Matt Carter 3:05 PM - Jul 2,2009

Since we don’t how many of these people aren’t eligible because their loans aren’t owned by Fannie or Freddie, we also could ask how many ARE NOT eligible because their LTV is too high.

I understand that Zillow’s numbers show 16.5 percent of conforming first mortgages have LTVs above 105 percent. That’s 9.2 million borrowers who were therefore excluded from the Home Affordable Refinance Program under the previous limit.

The percentage of loans above the new 125 percent LTV ceiling is 6.6 percent, or 3.7 million borrowers.

We don’t know for sure how many of the 5.6 million borrowers in the 105 to 125 percent LTV range will qualify for the program, but we can say the estimated 3.7 million folks above 125 LTV will not.
Esko Kiuru 7:16 PM - Jul 5,2009

Katie,

Increasing the LTV to 125% is of course good news, especially in hard-hit areas like Las Vegas and Phoenix. However, banks weren’t very excited about refinancing at the 105% level, so why would they do it now. Unless they get huge financial incentives from the taxpayer, they’ll continue watching things from the sidelines.
Dustin 7:28 AM - Jul 7,2009

This plan, of course, forgets to help those of us who have a 1st and 2nd mortgage. What good is it to refi the 1st if you can’t roll the 2nd into the loan! What a crock of S.
Christy 11:31 AM - Jul 8,2009

Yes, my 2nd mortgage company refuses to subordinate if I refi therefore, the $200 I could be saving a month is a no go all because my 2nd mortgage company refuses to subordinate. Doesn’t make any sense at all…
Loan Modification 2:46 AM - Jul 9,2009

i thought the cap at 125% originally was a great thing until i submitted 16 files that were fannnie held; only 2 were approved. maybe theres something i’m missing…??
100% Mortgage 4:38 AM - Aug 5,2009

Is this dependent on available equity? Halifax and Nationwide have recently offered similar in the UK.
ali, get rid of debt 4:56 AM - Aug 5,2009

There still seems to be a very strict credit approval criteria, where basically most people who do not want finance are offered it, and the ones that do are not.
Loan Modification 12:34 PM - Aug 5,2009

Very interesting post
Brian 9:37 AM - Aug 12,2009

A lot of those who don’t qualify for the Refi and are not sure about a loan modification should do some homework. You may be able to get a better deal through modification. I came across a site while doing my research that is actual free to homeowners. The info contained made me feel a lot more confident when approaching my lender. They also offer a private auction style bidding if you want to see what it would cost to have your transaction handled by a professional. The site is http://www.getloanmodified.com.

Good luck
Kevin Benner 10:00 PM - Nov 27,2009

It seems to me that while the government has basically asked the banks to play nicely the banks have responded with a resounding “But do I have too”. This seems especially true with the 2nd mortgage holders who are just rolling the dice that they will make more money holding tight than working out these loans.
Jackie 4:39 PM - Jan 6,2010

PLEASE READ IF YOU ARE GOING TO TRY FOR A MAKING HOMES AFFORDABLE MODIFICATION LOAN OR HAVE APPLIED OR TURNED DOWN..If you are wanting a Making Homes Affordable Modification Loan and the mortgage/bank is telling you are not qualified there are steps you can do to verify this. First you should contact (www.makinghomesaffordable.gov or 1/888-995-4673) first to get pre-qualified before contacting your bank/mortgage company. It takes just one phone call. They will put you with a counsler the get all your information to establish if you are eligible. Once you are then will forward it to your lender. That is not a stopping point you must call your lender and send them all the information they require (call weekly to make sure they have rec’d it). If for any reason after all information has been sent they tell you that you don’t qualify CALL Making Homes Affordable Program again to inform them your lender may not be following the guidelines. You should then be transfered to the Escalation Team. They will go over your current statis and if you allow them they will conference call with your lender to get your modification started. DO PAY ANY PAYMENTS YOU CAN….DO NOT GO ON THE RECOMMENDATION TO MISS PAYMENTS TO QUALIFY FOR THIS PROGRAM…..THAT IS INCORRECT. Each lender has their own loan modifictions that they may want you to do instead of the MHA one. You do not have to do these you have the right to MHA loan. My lender has made statements that are unbelievable. They stated that I should not pay for 3 months then I will qualify for the MHA Loan. I new something was wrong and decided to report it to MHA when I found out all this information. The Escalation team counsler was told the same thing by the helpful person at my Lenders Loan modifiction department. So it was verified that they were not following the guidelines. Keep records, names, reference numbers of calls, fax records it helps.
Don’t stop here either contact your state Dept. Of Banking and Finance, send your situation in an email to your Senators, Representatives and even the White House. You must fight for your right to have this. The banks are the ones that are stopping this! Why I don’t know since they will only lose money if they continue to get forclosures!
AV Homes 10:47 AM - Jul 1,2010

It’s a good thing that the HARP program has extended the percent of loan to value ratio with refinancing, in addition to the HAMP program that they might also qualify for and then finally the HAFA program as a last resort. Hopefully, these programs will help many homeowners in the next year.