For a while now we’ve been talking about the Obama administration’s Making Homes Affordable Refinance and Loan Modification program. We looked at who was eligible for the program, and what you needed to do in order to push through your own refinance or loan modification. According to the administration the plan was going to be able to help anywhere from 7 to 9 million people to get into a more affordable loan, all while not increasing costs through added PMI or other costs.
The reality of what has happened so far is much different. According to the Treasury Department earlier this week, so far only 20,000 loans have been refinanced. That’s a far cry from the millions of supposedly eligible homeowners who were forecast to be able to refinance. So what’s holding things up?
UPDATE: 2011 Changes To Home Affordable Refinance Program (HARP) Coming Soon
Problems With The Program: Why Haven’t More People Refinanced
There are quite a few reasons that people speculate the program hasn’t been more successful that it could have been.
- With mortgage rates in the low 6’s in recent years, for many people refinancing to the mid 5’s just doesn’t seem worth it after paying for points and high closing costs many banks are offering.
- According to many sources, including commenters on this blog, the program has been slow to ramp up. Borrowers have complained that banks are not approving their applications. People at the banks often don’t seem to have any idea what the program entails. Homeowners are getting the run around, and are being given refinance offers that aren’t really much of a deal.
- Many homeowners have seen dramatic drops in their home’s value in recent months/years, which means they don’t have the required 105% LTV ratio needed to benefit from the refinance program. (This week’s changes to the program should help address this).
Changes To The Program: 125% LTV Loans Now Available
The Obama administration eased eligibility rules on July 1st for the Home Affordable Refinance Program, lifting the maximum loan-to-value ratio to 125 percent from 105 percent. So that means the eligibility requirements for the program are now as follows:
- Loans originated on or before January 1, 2009.
- Your loan is is owned/backed by Fannie Mae or Freddie Mac.
- You are current on your mortgage payments, no 30 day deliquencies in the past 12 months.
- You have income to support the new mortgage payments.
- Your first mortgage will not exceed 125% of the current market value of the property.
The new requirement of no more than a 125% mortgage to home market value ratio should allow quite a few more people the chance to apply for a refinance under the HARP program.
If your loan is owned by Freddie Mac and you are refinancing through your current servicer, the expanded LTV ratios are available now. If you are refinancing through another Freddie Mac lender, the expanded ratios will become available October 1st.
If your loan is owned by Fannie Mae you must use your current loan servicer to refinance your mortgage, but you must wait until September 1, 2009 before you can take advantage of the expanded LTV program (You must wait if your LTV is more than 105%).
A Step In The Right Direction?
Administration officials are confident that the new program requirements should help a lot of people, and the changes are crucial in helping continue the recovery.
Treasury Secretary Timothy F. Geithner said the move was “a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.”
I’m not as confident as they are that this will really help to improve things (given the program’s track record so far), but I really hope that they’re right.
Want to find out more details about the program? Check out the government’s website at http://www.makinghomeaffordable.gov/, and read our articles that we’ve previously written on the topic:
- Do I Qualify For The Making Home Affordable Program?
- My Experience With the HARP program
- FAQ – Modification Program
- FAQ – Refinance Program
- Making Home Affordable Loan Mod Program And Second Mortgage Modifications
Do you think that the expanded loan to value ratio will allow more homeowners to take advantage of the Home Affordable Refinance Program (Will it help you?)? Will problems with the program being implemented by banks continue to plague HARP? What’s your take on the program? We’re interested on hearing your personal experience!
We’ve contacted BofA (was Countrywide) and were told they can’t help us yet because they are concentrating on refinancing the folks that DO NOT have PMI – I guess because those loans are a higher risk to the bank than the ones that do have PMI.
Something I would be interested in doing is to roll our 2nd into the new 1st since we could easily squeeze both into even the 105% LTV, but definitely with the 125% (in September…but maybe BofA will be ready to help us by then).
Thanks a lot for the link Pete!
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Yes, thanks for the link, Pete. I need to write on this more.
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We tried to refinance under the first requirement of 105 percent and the house was appraised so low that it did not work out. I just calculated with the 125% and it still won’t work for us. We meet all the other requirements and have a fixed loan…. its a bummer that we can’t work something out right now! Thank you for posting this information!
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refinance, no cost fha, no closing costs, quick closing, real help, OBAMA’S PLAN, HELP
aren’t you guys reading? just posting? I have given you reall honest help…even the phone number of the man who helped me. That’s all I can do. please read my previous 2 posts….rates are rising….get help now. banks are gouging, unfair, high closing costs are unnecessary. I can’t keep worrying about all of you who are suffering like i was…..this is my laST POST…WITH TAGS….MAYBE ONE WILL GET RELIEF. read
Could you send me some info on your refi. I have been having all sorts of problems with Wells Fargo. Any help to get me away from these idiots would be great.
Thanks.
anthony
Too bad they didn’t to this while rates were worth refinancing for. The poison pill this time, on the Fannie side at least, is the requirement to go with the existing service company. They aren’t going to offer a deal worth taking. I know – I’ve been seeing crap offers from B of A in my mailbox for months.
If the government wants to get things moving they need to back refi’s with any servicer, no PMI required on the new loan, and no LTV limits. LTV can affect the rate, but nothing else. Think about it: the consumer already has a loan at that LTV ratio! No new risk is introduced by giving them a better loan at the same LTV. I don’t personally think the government should be doing anything of this sort, but as far as their goals are concerned, this is what it will take.
I was not able to refinance under the 105% LTV but the 125% LTV will be more than adequate for my situation. I contacted my loan servicer (OneWest formerly IndyMac) about the recently expanded LTV ratios in the MHA program today. I was told that they have not even implemented the program at the original 105% level and to call back in a few weeks. That is quite disheartening as this program has been out for months.
This program will not be a cure-all for me. I have never paid late and had no change in my income. However, I have a 5/1 ARM on the primary portion of my mortgage and a second fixed mortgage that is not Fannie Mae/Freddie Mac. The second mort has a horrible interest rate. My plan to refinance both into one loan when the 5/1 expires is impossible since my home has fallen 15% in value from its new construction value instead of rising in value at all.
This program will not allow me to combine both loans into one since the second is not Freddie Mac/Fannie Mae. I can only refinance the first one according to the rules of the program. That will be helpful in allowing me to avoid adjustments on the primary, but my only option with the second is to throw all the extra money I can at it until it is paid off. I wish the program would address this problem.
The lender and I were fully counting on our appraisel coming in at the LTV of 105% however the appraisel came in much lower. Thank God I am with in the new limit of 125 Ltv however I will have to wait and I am sure I will be paying more points come September. I have to say I couldn’t believe that a short sale that hasn’t even closed is one of my comparable sales. Currently we are looking to see if there is anything we can do to fight the appraisel.
I am glad to hear the new limits as I have been trying to refinance with Provident Funding and they have not and do not know when they will offer the refinance if they even do! So all the while, the value of my home continues to plummet. I may be able to take advantage of the 125% since the 105% came and went as I am waiting for them to implement this. I have no where else to go for refinance, as I have the Freddie Mac and keep being referred back to my current lender. I thought that they had to help out if it was a freddie mac or fannie mae. I guess I will never be able to get any help.
Angela,
I am in the same boat too. My loan is with Provident Funding ( thru Freddie Mac) ..i called them y’day and their response seems to be scray ..they haven;t started the program and dont know when they will start too. If you happen to find when they will start this program could you email me?
thanks
mahe
I will if I can get a straight answer, mahe.
angela
I spoke to Provident Funding today and I was informed that they are not participating (nor plan to) in the home affordable refinancing program.
Misconception: All mortgage servicers are required to participate in the Home Affordable Refinance program.
The reality: Mortgage companies don’t have to participate. One holdout is Provident Funding. The Burlingame, Calif., lender was the eighth-largest mortgage originator in the first quarter of 2009, according to National Mortgage News.
Provident’s no-refi policy has been problematic for customers with Freddie-owned loans because of Freddie’s initial ban on refinancing with another lender. Searching for a loophole, one Bankrate reader found a section of the Making Home Affordable Web site that read, “In addition, all servicers for loans owned by Fannie Mae and Freddie Mac are required to participate.” But that sentence referred to the mortgage modification program, not the refinance program.
I also have Provident, and they flat out told me they are not participating nor do they ever plan to participate in the mortgage relief program. I will do everything I can to pursuade people to NOT CHOOSE PROVIDENT EVER AGAIN for a loan of any kind. F-them!
I have a Provident loan too that I must refi or sell short. I have talked to Provident over 100 times in the last 6 months. Last month, one person said that they never plan to offer the HARP, but everyone else before and since has told me that they plan to. But they all say that management won’t tell them any dates.
Call 1-800-FREDDIE to ask them for help with Provident. Freddie will actually answer the phone and talk to you. Ask Freddie to lean on Provident.
I, too, have a Provident loan. In the last 4 months the story has gone from, “we’re setting that department up”, to “we’re only modifying delinquent loans”. As I understand the Home Affordable programs, if I’m delinquent I’m not eligible. Then they told me I could qualify for a “relief refinance”…so my name went on another list. Still have not heard back from them. Last time I called, they told me I could call other banks and see if they would refinance me through the Relief Refinance Open Option. But I know, (why don’t they?), that if you have PMI that is not an option yet. And my PMI provider requires me to refinance through my current lender!
This is so frustrating!! I did not choose to do business with Provident…they bought my loan so I am stuck with them!
I just felt I was given the runaround by Bank of America. Thank goodness for this article, because Bank of America wasn’t about to offer any explanations. They told me that I currently did not qualify under the 105% LTV and offered no information at all about when they would allow the new 125% requirement. I had to call up another lender (Wells Fargo) and search the internet (found this article!) before I realized it was more of the same…playing the waiting game.
Glad we could help. You’ll have to let us all know how it turns out for you.
I’ve been trying for several months now to refinance to the lower interest rates. I qualified under the 105% but my lender (Wells Fargo) wants to charge extra points because I no longer have at least 20% equity. Wasn’t the purpose of this program to allow people to refinance at the lower interest rates without having to pay penalties??? No wonder no one is ‘taking advantage’ of this program.
You got that right, I too have been working with wells fargo for several months and they just inform me my points are going from 1.75% to 3.25%. Of my 220,000 loan 10,000 is closing costs, my house apprasied at 245,000.
Lordy do I wish that they would get this in order already! I have been trying since May to do something under this plan. We were unable to modify becasue we made to much money. Couldnt re-fi becasue we owed to much at 105% ltv, now I hewar 125% and get excited but you tell me where can I find abank that is participating? Aurora ugh just keeps giving me nop answers they dont even know if they will participate!
I started the application for a HARP refi with Wells Fargo in April and just got rejected even though we qualify under the 125% Ltv.. Why? B/c Wells Fargo isn’t choosing to accept applications for borrowers with LTV greater than 105% I was told. I complained to freddie mac and I was surprised to receive a response from corp counsel of freddie mac saying that b/c this refi program is voluntary, banks can choose to participate or not – BUT “why don’t you check back after October 1, maybe things will have changed.” Mean while I”ve lost the 5% interest rate I had locked in. Thanks for nothing wells fargo!
Wachovia has been promising the Making Home Affordable Program since June 1st. Every month I call them back to ask about it, they tell me to check back next month. I called today and they told me now maybe by November 1st. These banks should be ashamed of themselves dragging their feet when people need help.
I had hoped to find some helpful info here, but unfortunately it looks like I’m in the same predicament as many others. Provident Funding bought my loan, has been telling me for months they would be offering the new HARP program, yet don’t. Stuck with Freddie Mac so couldn’t go to other lenders. Also now more than 105% LTV, so Wells Fargo won’t offer me anything either. They were glad to talk with me when I was 95-100%, but that was a while ago, prior to Oct 1. I’ve tried bank after bank yet they all either don’t offer the 105-125% LTV, or they just don’t participate. Frustrating that I can be current, making payments yet no-one will talk with me and the people I know that got behind (either intentionally or not) and didn’t make payments are the ones getting help.
I keep on calling Bank of America every week asking about the 125% loan to value refinancing program that Obama launched in July but Bank of America did not implement this program yet!I am tired of calling them cause they move so slow with this 125%LTV refinancing program!I am really disgusted by this bank!They do not care about customers!
I am wondering why does it take so long for thse Banks to implement the 125%LTV refinancing program?
I have been talking to HSBC, Hope Now for Homeowners, and FannieMae since August ’08. I have dealt with the same frustrations of we can do it, to no we can’t, to we never talked to you, to 105% right around the corner, to 125% around the corner, to not enough demand for 125% so we are not going to do it. By the way, HSBC took $12.8 million in March during Bailout. Unbelievable….Home Affordable? Yeah right!
Has anyone heard when Bank of America will roll out the 125% program? And is it possible to go to new lenders for the 125% mortgage, or do you have to stay with your current mortgage-holder?
Um, never. It is all a scam. Anybody that voted for Hussein Obama gets exactly what they deserve.
Just spoke with my sister-in-law. they just refinanced their home and cabin (one was underwater), current on payments, etc….. Chase refinanced their primary under this and Wells Fargo took care of the cabin which was under water. Wells was a pain, but worked.
Yeah, BOA will NOT honor their 125% ltv that they have been advertising for months and mailing us harassing mail. This is all a scam contrived by the terrorist Hussein Obama administration to make his buddies in the banking industry richer. To give our money to the middle east and china while creating a new Somalia right here in the United States. This is only the beginning. We haven’t even begun to see the new depression. Arm yourselves, it is going to get bloody.
BOA finally contacted me concernint the 125% ltv program. Things were going well, but then they informed me that I won’t qualify becuase I had a short sale on an investment property earlier this year. I have been searching the web trying to find anything relating previous short sale, not on my primary residence effecting the program, but haven’t come up with anything yet. I think they are just jerking me around. Has anyone else heard anything similar?
Thanks for the info everyone..I have a loan with Provident Funding who still does not offer The Home Affordable Refinance.. which looks like even if they did I still would not qualify since my LTV ratio is currently over the 125%… however all my questions were answered here, thanks again.
I also have been talking to HSBC. They will not do the 125% as of November 09. I owe $392,000 and home appraised at $360,000 they told me to try again when home is $380,000 HELLO!!! how do they expect a $20,000 value rise in few months GRRRRR!!! I also read on home affordable website that the deadline for this program is June 2010 GREAT!
I got my refinancing application with Bank of America denied for this unbelievable reason as explained by their loan officer:”when we did your loan originally back in 2005 we provided the financing then sold the loan to Fannie Mae to hold while we continued servicing it. Well either when we did the loan or when Fannie Mae recorded it in their accounts the unit number was left off of the property address. Now present day we are trying to put your application through a MHA Fannie Mae refinance program and MHA is not recognizing the address as correct and it is rejecting the application.” They are still not offering yet the 125% loan to value program so they cause me a huge disappointment.It looks like bank of America is not willing to help me refinance my home loan.And I know i am not the only one who suffers because of them.
I originated my loan with Quicken in 2006, who sold the loan to Provident Funding. I contacted Provident about a re-fi (125% LTV) on Oct 21 2010, and they said they are “working on a program” that “may be in place in a couple of weeks”.
Quite frankly, I’m wondering why it would be in their best interest to refi someone and lose all that interest – and that’s probably why they aren’t doing it. They know many people will not qualify, so they are forced to stay with their loans and pay higher rates.
We have great FICO scores, so we are going to get a rate in the 4’s, shedding our current 6.25% fixed-rate loan.
Points and fees seem very high in this market, based on the information we have received from lenders so far. Guess they gotta milk the people somehow.
Thx for this very useful information. We tried to refinance about a year ago, but we were $50k underwater. We currently have an interest-only loan for 10 years at 6.5%, after which time it changes to a conventional loan at 6.5% for another 20 yrs. After 10 yrs, naturally our payment goes up. We have no PMI. We have always been current on our mortgage payments. We have excellent credit and good income. We’d love to refinance to a conventional loan at a lower rate, but the problem is, our mortgage is owned by Bank of America, not Freddie Mac or Fannie Mae. Last time I talked to BOA they wouldn’t even consider refinancing us. What can we do, short of coming up with $50k?
Great article and comments. Many websites (including freddie mac) post the key point of “unlimited LTV”. So, I couldn’t help but feel relief coming since I meet all the requirements; 12 months paid on time, freddie mac loan, etc. *BUT*, that relief was short lived since I’ve encountered similar issues as others here in the last few days.
I have a very simple question.
What is the point of this HARP 2.0 program if loan services like Provident Funding don’t have to participate if they don’t feel like it?
Ridiculous!!! Its the equivalent of adding a law that does not get enforced.
Shame on those who got our hopes up, Obama included.
Please call FreddieMac/Obama/whoever and demand better.
The whole program is BS. Why is this a volunteer program for banks? Banks that have received billions of dollars of bailout money from us, the Taxpayor! This should be a mandatory program, not for just people with Freddie Mac or Fannie Mae loans, but for all people that have mortgages underwater yet have never been late with their payments, have good credit and are responsible. The system now is encouraging people to be irresponsible and just walk away! It makes no sense; the banks execs are still getting obscene amounts of compensation, thanks to our bailout, while we are struggling to meet everday expenses, forget about ever taking a vacation. WRITE OBAMA, WRITE YOUR CONGRESSPERSON,NOTHING WILL CHANGE IF PEOPLE DON’T FIGHT AND SPEAK UP- WE, THE PEOPLE, HAVE THE POWER IF WE ACT ON IT!!
I was told my interest rate was going to go from 6.5 to 5.5, I was never told I was getting a new 30 year loan, losing 10 years of payments & adding $75 grand more on to my mgt. I got screwed. What can I do? This was in 08