HARP, not a musical instrument!

HARP, just a cute acronym for Home Affordable Refinance Program. This plan is to allow people to refinance older loans at today's lower interest rates, thereby reducing the required monthly payment. The President thinks the average borrower will save as much as $2000 on interest and will spend that money. Hence, this is an attempt to help the homeowner and act as a stimulus also.

HARP extends the old acccess to refinancing of the President's last attempt to help through 2013.

Sounds like a win/win doesn't it?

Now let's look at some details.

• You must have been current for 6 months.
• You can only have missed 1 payment in the last year.
• No appraisal required.
• Unlimited loan to value ratio. This is to allow those who are seriously underwater access to refinance.
• Your loan must be owned by Fannie Mae or Freddie Mac. (in other words conventional only, FHA and VA borrowers need not apply.)
• This is for loans originated before June 2009.

So, what's the catch? (Yes there are some)

• The plan is governmental, but the banks are allowed to create OVERLAY requirements. One such requirement you can expect is lenders will set a loan to value ratio, in spite of the intent of the rule.
• We don't know what the overlay requirements will be until sometime in November.
• It appears that if a person had a "Liars Loan" before, they will re able to refinance under the same conditions. In other words, no verifyable income or assets.

It appears, like I wrote in 2009 Here, probably not a lot of help for most people.