By Keith Loria
President Barack Obama’s administration recently launched a new plan designed to help struggling homeowners refinance underwater mortgage loans at today’s historically low interest rates.

On October 24, President Obama announced that the government’s Home Affordable Refinance Program (HARP) was being modified to make refinancing at these current low interest rates easier for borrowers, in hopes of saving Americans thousands of dollars a year.

The real estate industry has had mixed reaction to the plan, with some praising the initiative while others say it doesn't go far enough.

“Over the past two years, we’ve already taken some steps to help folks refinance their mortgages,” Obama announced, listing a series of measures his administration had enacted. “But we can do more.”

Obama’s new plan calls for a sweeping overhaul of the 2-and-a-half-year-old HARP program, easing rules and reducing fees. The revisions include lifting a ceiling that barred participation by borrowers who owed more than 125% of the value of their homes, and using a controversial modeling method to replace costly appraisals that are among the fees that have kept some homeowners from refinancing.

The HARP program cuts red tape, gives banks an incentive to participate and lowers the usual fees paid for refinancing. It also encourages borrowers to switch from 30-year mortgages to those of shorter durations, which would reduce the overall risk for Fannie Mae and Freddie Mac loans.

Currently, Americans hold about 11 million underwater mortgages, where the loan amount exceeds the home value. However, only a fraction of those will qualify for refinancing under the new plan.

Those eligible include homeowners who have kept up their loan payments for at least six months, have loans guaranteed by the housing agencies and owe more than 125% of their home’s value.

Many analysts are uncertain as to whether this will solve the problem since the program won’t help the 3.5 million borrowers who are seriously delinquent on their loans or are already in default.

“It’s a step forward, but what we need is a leap forward,” said John Taylor, president of the National Community Reinvestment Coalition, an association of organizations that promote access to affordable housing.

Terry Green, a broker with Allied Mortgage Corporation in Annandale, Va., and the President of the National Lenders Alliance is critical of the changes.

“The housing market should seek its own bottom and it will repair itself,” he said. “Every time the government gets involved and intervenes, all it does is delay the ultimate repair of the housing market. I think it’s a bad move.”

Still, the plan could help one to two million people get significantly lower monthly payments in hopes of stabilizing the real estate market.

The President himself acknowledged that this latest proposal will not do all that’s needed to get the housing market back on its feet, but he believes it will help.

“These are important steps that will help more homeowners refinance at lower rates, enable consumers to save money and help get folks spending again,” Obama said.

To get a Free list of homes that meet all of your specifications, and any ask of your Frederick Maryland real estate or mortgage questions, please contact me toll Free, 24/7, at 1-800-395-9636 x7 or E-mail me at bill@homes2price.com. My Office number at Real Estate Teams, LLC is 301-695-3020 x2793

FREE OFFER: use the form below to ask your question and you will receive my Free E-mail Series of Real Estate Articles:

Republished With permission by RISMedia © Copyright 2011