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Obama announces New Program to Help ‘Underwater’ Homeowners

By Zachary A. Goldfarb, Monday, October 24, 9:31 AM

The Federal Housing Finance Agency announced on Monday morning new rules that will allow many more “underwater” homeowners – who owe more than their properties are worth – to refinance at today’s ultra-low rates.

FHFA estimates up to a million borrowers will use the program, which was originally rolled out in early 2009 and has fallen far short of the number of people it was supposed to help.

Only mortgages backed by Fannie Mae and Freddie Mac will be eligible.

In the past, borrowers who owed only more than 25 percent more than their homes are worth could participate in the program. Now, there is no cap on how much a borrower owes.


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We walked away

We lost our home last year. This sure helps us out. Now it is adding insult to injury.

The Obama Refi Plan Could Fall Way Short

When the White House first entertained the thought of a massive GSE refi plan it had high hopes that eventually $1 trillion of Fannie Mae/Freddie Mac underwater loans might be restructured, resulting in annual savings north of $20 billion a year for consumers – money that could immediately be injected into the U.S. economy. On Monday morning the Obama refi plan (being conducted via HARP) was officially unveiled. Hopes are running high that thousands upon thousands will take advantage of the program. But the big question remains: will they? A new report from Keefe, Bruyette & Woods suggests that the answer to that question is no. The company writes: “While some potential changes, such as a waiver of reps and warranties on HARP loans, could be meaningful in terms of raising HARP volume sharply, the numbers are still likely to be small relative to the mortgage market as a whole. Even if HARP volume doubles and equals $250 billion in volume over the next two years, it would still mean that HARP volume would account for about 10% of total mortgage volume. Further, mortgage rates have increased recently, which is likely to result in prepayment speeds tapering off after 4Q11. As a result, we believe that the most likely impact of HARP is an extension of the mini refinance wave through mid-2012.”

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The HARP Mortgage Bailout A

The HARP Mortgage Bailout

A hair of the dog that killed us.

A couple of weeks ago, President Obama asked his advisors to come up with ways he could bypass Congress to pursue his agenda. “We’re not going to wait for Congress. So my instruction to… all the advisers who are sitting around the table is, scour this report, identify all those areas in which we can act administratively without additional congressional authorization, and just get it done,” the President told his Jobs and Competitiveness Council.

It looks like one method of bypassing Congress will involve the Administration using executive fiat to mutate the Home Affordable Refinance Program, which was designed to avoid foreclosures by rearranging “underwater” mortgages. As reported by Fox News:

Seeking to breathe new life into a sagging economy, President Obama will attempt an executive branch rescue of homeowners trying to refinance underwater mortgages, with a new initiative that lets people with little or no equity get a better interest rate at a reduced cost.

The initiative, the first in a series of announcements expected this week by the president, applies to homeowners with federally guaranteed mortgages who are current on their payments.

The revamped Home Affordable Refinance Program, which aims to avert foreclosures, is expected "to encourage new, lower-cost loans" to more homeowners who are paying more than the value of their properties, a senior administration official said ahead of Obama's Monday announcement.

Fox goes on to explain that “The change is not a mass refinancing of everyone in America, but a targeted fix to open up the program to more people who are underwater.” Specifically, the Administration wants to relax the eligibility requirements for HARP refinancing, which currently include restrictions on how much the value of the old loan can exceed the current appraised value of the home. The current program caps mortgages eligible for refinance at 125% of property value.

Reuters reports on some other proposed HARP modifications:

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Ya what about me? I am gonna

Ya what about me? I am gonna lose my house and did bnot use Fannie or Freddie. How come he does not "care" about the rest of us in this f'd up economy he is lord of..

Who pays for the short fall?

We the tax payer.

This is another bailout.

Obama's "underwater bailout" is as about as sound as everything else he's done.

"It does not take a majority to prevail but rather an irate, tireless minority keen on setting brushfires of freedom in the minds of men."

--Samuel Adams