The federal government released some of the broad items that the revamped Home Affordable Refinance Program (HARP) will address today. While I understand they are attempting to placate the part of the market that has kept up to date on their mortgages while their home value has fallen below their mortgage balance, I don’t get how this is going to help the public in general…and especially the housing market.
While the details of the program are scant so far, it is the belief of most that homeowners who have been current for their last 6 months on their mortgage and who have missed no more than 1 payment in the last year will meet the bare minimum of eligibility for the program. Other factors, such as credit score, will also be in play within the determination if someone qualifies or not.
From the side of the banks, I don’t understand why a bank would be incentivized to refinance or take on a mortgage with a loan to value over 100%. These homeowners are much more likely to default if times get tough. (we’ll see what types of incentives the government ends up giving them)
From a housing market perspective, I don’t see HARP really having any effect. Those that are currently current on payments and that would like to stay in their home will probably not make a move whether they were given the opportunity to move or not.
All I see this program as is a way to make a certain segment of voters happy. Those who were current on their mortgage payments, but underwater with their loans, and angry that other people who were behind on their mortgages were getting ‘bailed-out’. But, as always, its just my opinion…let me know if you think I’m right or wrong.
I’ll update this post as more details become available on HARP.
