A recent article in the Press Enterprise states that homeowners are having difficulty refinancing their loans under the Home Affordable Refinance Program (HARP), a program under the government’s Making Home Affordable Program.  HARP is a program designed to allow homeowners to refinance their homes into today’s lower rates despite their inability to meet traditional lending standards.  HARP has been around for some time but it received some much needed changes in October when it was announced that the program would he expanded to cover homeowners who were seriously underwater on their mortgage.  Additionally, the new program would reduce or eliminate many of the costs involved in the process in order to ensure homeowners refinance property without generating much additional debt.

According to the article, lenders have embraced the new changes to varying degrees with some lenders insisting that they will only refinance their own loans.  These banks claim that they are worried about having to buy back loans in the future if the loan goes into default despite the provisions which provide that the homes will be guaranteed by Fannie Mae or Freddie Mac.

As is usually the case in these situations, I think there is a much deeper issue here.  Because these loans are performing loans (borrowers are current on their loans), the larger institutions are likely hesitant to refinance loans that pay at interest rates several points above market rates.  While I doubt any formal agreement exists between the large banks, it makes financial sense for the larger banks to mutually agree to not refinance each other’s loans.  This will likely discourage rate shopping, keep interest rates above market rates, and generally make it more difficult for homeowner’s to refinance.   While the process is not easy, I have had a few clients qualify to refinance their property under HARP.  If you or someone you know is considering their options for a more affordable payment, our office can help.  We can consider your options under HARP or a loan modification if you have fallen behind on payments.  Contact our office today at (051) 801-5570.

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