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Archives for October 2011

Will The Home Affordable Refinance Program Cause An Economic Boost?

President Obama spoke in Las Vegas on October 24th about altering the rules to the 2009 Home Affordable Refinance Program, HARP to help stabilize the economy.

Homeowners of Los Angeles are crossing their fingers for an upturn in the housing market.  Realty Trac reported that in Southern California alone Los Angeles homeowners lost nearly $80 billion in home values since 2008.  Many analysts have their own opinion on whether these new mortgage rules will be beneficial.

CNN Money is not on board with the fact that there will be much of an impact. “The program is being touted as a way to help stabilize the housing market and stimulate the economy. But without addressing distressed homeowners and helping to clear the foreclosure glut, the effects will likely be limited.”

The chief economist, Mark Zandi at Moody’s Analytics has a different perspective. He predicts that 2.85 million homeowners will refinance before the end of 2013, which is 1.6 million more than anticipated with the old mortgage rules. In an email to CNN Zandi states his opinion clearly, “The program will ultimately provide a meaningful boost to the broader economy as financially stressed households will benefit from much lower mortgage payments…It will also provide a bit of help to the housing market by forestalling some mortgage defaults.”

At Macroeconomic Advisers is taking both sides as they state, “HARP refinances might double under the revised guidelines,” but they do not believe that would “provide a major stimulus.”

Even though this is an improvement to HARP, these new rules are not likely to effect the economy on a mass scale. If we want a national change, we are going to need monumental changes in programs, such as HARP.

Homeowners are wondering what the qualifications are for this new HARP.  First off, homeowners must be current on their mortgage payments with no late payments in the past 6 months.  To qualify the loan has to be over 80 percent of the current market value of their homes.  Also, the loan origination date must be on or before May 31, 2009 by Fannie Mae or Freddie Mac.  To those distressed homeowners possibly fit for this plan, checkout the new guidelines for the changes to HARP on November 15 by The Federal Housing Finance Agency.