Back in May, I wrote a diary about the HARP/HAMP Programs that the Obama Administration and Congress passed into law to help struggling homeowners and the economy. I wanted to write this quick update about how those programs are working, as well as the outcome of my own personal experience with this program. Follow me.....
First, the program. It seems that things have gotten off to a rocky start and have not developed the way the Administration might have hoped. The initial figures cited on how many households this program would potentially help were approximately 7 to 9 million (both refinances and modifications). It now appears that the actual number helped (so far) is far less:
Since the launch of Making Home Affordable, more than one million Americans have now refinanced. Fannie Mae has had over 233,000 eligible refinance applications through its refinancing program, with more than 51,000 of these having loan-to-value ratios between 80% and 105%. More than 55,000 Home Affordable Modification offers have been extended to qualifying borrowers. Additionally, servicers have mailed more than 300,000 letters to homeowners who are potential candidates for the program.
Those numbers seem woefully small to me, considering the dire straits millions of families are in. Additionally:
Fourteen servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, Home Affordable Modification participants now account for more than 75% of all loans in the country.
If that's the case, then it backs up the abysmal new and existing home sales numbers we keep hearing about. People are trying to get help staying in their current home, not buy a new one.
Granted, the program is still in its early days, and the Administration has passed new, more inclusive program guidelines, but it is looking like things are getting bogged down.
[R]epresentatives from the nation’s top mortgage servicing companies will be called to the carpet later today by senior officials from the departments of the Treasury, Housing, and Urban Development to defend their performance record under the HAMP program.
The invitation to the meeting, described by The New York Times as an ultimatum, was sent as a joint letter signed by Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan expressing not-so-veiled frustration with servicers' lack of effective mortgage modification action to date.
Meanwhile, as things stagnate, interest rates are going up again. They are still lower than this time last year, but that is not likely to last. Interest rates are the big factor in most loan refinances. Many people who would qualify for a refinance might be shut out when rates go up. Homeowners with ARMs coming due would be forced to refi. into a much higher rate, somewhat defeating the purpose. Yes, they would save in the long run, but adding $ onto the monthly bill is not helpful. Many of these people will most likely have to wait until their ARM resets and then try to work something out at a later date, possibly when things start to go bad.
As to my story....
Hubby and I applied for a refinance through HARP back in May. Things went somewhat slowly, due to the huge volume of people participating in the new program (we were one of the first at our bank, our lender told us) as well as the lack of personnel at the lending companies, but finally we closed last week. We came out of the whole process with $250 in our pocket (as per the program), and a monthly savings on our mortgage bill of about $240. Might not sound like a lot to some, but it is a better cushion for us and could mean the difference between having a home or not if something were to happen to hubby's job. So, the program worked for us exactly as intended.
While every home saved is important to the homeowners as well as the economy as a whole, it would be so much better if things were moving more quickly. Millions of people are still losing their homes. The government cannot save them all, but it certainly doesn't help when private lenders are dragging their feet on the program. Hopefully the Administration gets the whip cracking on this problem.
*Title changed to better explain diary. I'm a lousy writer, so bear with me. :)