Federal Programs to Refinance Mortgages
The housing crash which engulfed America starting in 2007 forced tens of thousands of people to reconsider their house loans. With homeowners fighting with unaffordable mortgages, refinancing turned into one approach to avoid foreclosure. As of July 2010, several national mortgage refinance plans have been assist troubled homeowners.
Home Affordable Refinance Program (HARP)
HARP differs from Creating Home Affordable’s mortgage-modification program. While both are a response to the foreclosure catastrophe, a modification tweaks the conditions of a homeowner’s present loan to bring the monthly payment for an affordable level. With a refinance, borrowers move into an entirely new loan. The purpose of HARP, according to the Making Home Cheap site, is to get homeowners from mortgages with unaffordable monthly payments. HARP deals only with loans serviced by Fannie Mae or Freddie Mac. HARP doesn’t accept borrowers that are past due on their present mortgage. The Creating Home Affordable site advises homeowners to ask their creditor.
HOPE for Homeowners
The Department of Housing and Urban Development (HUD) manages the HOPE for Homeowners program. This plan accepts borrowers that are committing over 31 percent of their earnings to their mortgage payment. If a homeowner could prove his inability to make his mortgage payment going ahead, and he meets other eligibility standards, HOPE for Homeowners permits him to jettison his present loan to get a 30-year fixed-rate mortgage insured by the Federal Housing Administration (FHA). This refinance scheme, designed to assist homeowners avoid foreclosure, has not had much of an effect, as of summer 2010. In June 2010, HUD reported that only 50 people had implemented to refinance loans. Seven of the 50 applications were approved for an FHA-insured mortgage in June.
FHA Refinancing
For several years, FHA has offered two types of options which are not directly connected with the foreclosure catastrophe. For instance, HUD notes that because the early 1980s, the FHA has processed”streamline refinances” on mortgages that they insure. A streamline refinance rolls one FHA loan into another one to decrease the price of the mortgage, in terms of interest and monthly payment. Ordinarily, a homeowner would exercise this choice if interest rates had dropped significantly since she took her out first FHA loan. The FHA allows mortgage holders that are conventional that are qualified to refinance into a new FHA loan. In June 2010, HUD data shows that 29,776 mortgage refinances were finished by FHA lenders. Of these, 20,095 were formerly conventional mortgages, while 9,682 were FHA products. The amount of FHA mortgage refinances that utilized the streamline procedure totaled 6,801.