Updated Mortgage Aid Program Will Hopefully Help Economy

Following months in the works, HARP 2.0 is available to Fannie Mae and Freddie Mac consumers who would like to refinance mortgage loan but have borrowed more on their home loans than their properties presently are worth.

HARP 2.0 HARP indicates Home Affordable Refinance Program is being booked as an enhancement over the three-year-old edition that practically everyone acknowledges didn't assist anybody.

The reason for that breakdown: The original program had limits on loan-to-value proportion, the amount of a bank loan as a proportion of the evaluated monetary worth of a property. If the balance of a home loan exceeded the appraised worth say, $ 300,000 vis-a-vis $ 150,000 the buyer wasn't permitted to re-finance.

Recognizing that not one of the buyers the program was meant to aid would have the ability to qualify, the limits were dropped when the brand-new version of HARP was proclaimed in October.

Does that mean all financial institutions have accepted no limits?

"I have lenders that have limited the loan-to-values. Some have even differentiated between attached and detached homes," said Philadelphia home loan broker Fred Glick, who has started a blog, to update consumers. "They still are limiting what they will do" with loan-to-value ratios of 150 percent and no more.

"All in all, it is a great way to get people's rates down in spite of low values," Glick said. "This will decrease the supply of homes for sale and increase values over the long run."

As with each of such schemes, the fair amounts oftime ever since HARP 2.0 was declared have definitely been invested attempting to get loan providers on board no easy task since Fannie and Freddie loans are pooled as mortgage-backed securities that are owned by many investors. All the investors need to agree before borrowers can apply to reduce monthly payments to today's low fixed interest rates, which remained under 4 percent for many months but now are beginning to increase as bond yields rise in an apparently improving economy.

As of March 17, HARP 2.0 has been in place to help keep homeowners above water. About four million Fannie Mae and Freddie Mac borrowers nationwide owe more on their mortgages than their homes are worth.