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Fannie, Freddie Debtors In The Hole May Now Refinance

October 25, 2011 by  

Fannie, Freddie Debtors In The Hole May Now Refinance

The Federal Housing Finance Agency (FHFA) announced Monday a program that will allow homeowners who are “underwater” — owing more on their homes than they are worth — to refinance at today’s low interest rates.

The Home Affordable Refinance Program (HARP) will apply to borrowers of Fannie Mae and Freddie Mac, and FHFA estimates that up to 1 million borrowers will use the program, according to The Washington Post.

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said FHFA Acting Director Edward J. DeMarco in a press release. “Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

HARP is the only program by which borrowers owing more on their property than it is worth are given the option to refinance at a lower interest rate. The new changes will remove a number of fees and rules, thereby making it easier for these “underwater” homeowners to act.

Sam Rolley

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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  • Ernest LaFoy

    Isn’t this the same program that caused the housing market to tank last time?

  • JTB

    all this is another campaign move for more votes. he could care less about the “underwater” mortgages! What an idiot!

  • DanB

    We gave loans to those who could not afford them, forced the banks to go along, and it collapsed the economy of America in 2008 but it did not destroy the economy. Now we are going to repeat the problem? It seems to me that some people have bought into stupidity with their whole hearts and souls. And those who are not being deceived into thinking this is a good (whether by themselves or others), those actually know this is a bad idea and still encouraging it, well, those people are probably hoping to what the housing crash in 2008 did not do–and that is destroy the American economy completely and utterly–as well further indoctrinate us on having government dictate economy.

    Personally, I am a bit disgusted with this all. I wish Fannie and Freddie were dissolved and government got out of the housing market altogether. I know this is wishful thinking since politicians are elected based on promises to give their constituents that which their constituents are too lazy to earn for themselves, including a better home….

    • ernest

      what they are trying to do is say THE HOUSING MARKET HAS BOTTOMED-OUT hope their right but we don’t beleive it?

    • ernest

      what they are trying to do is say THE HOUSING MARKET HAS BOTTOMED-OUT hope their right but we don’t beleive it? so it just turns in to more waste.

  • RivahMitch

    Once again, a new government program where the banks make a profit while taking no risk and the taxpayer covers them while the government extorts even more money. So, as housing prices continue to decline, the taxpayer will once again be left paying the bill. I’ve a family member who is significantly underwater on a home but continues to meet the obligation. So that family member, meeting her obligations, will like the rest of us, be footing the bill for those who choose not to.

  • Gilly

    There appear to be two winners and one huge loser in these proposed deals if I understand it correctly.

    The underwater home owner is going to save a huge amount of interest if they were paying 10%pa and now going to pay 5% pa and the original lender who has lost its security will suddenly get all its money back. But here is the best one…who ever purchased those loans at penny’s in the dollar will suddenly make a million % profit, yet the new lender will acquire a worthless mortgage backed security.
    Is this how other readers view it too? Seems like a scam to use public funds to make others super wealthy or to save those defunct banks who may still be holding those worthless securities. Who is providing these new refinancing funds? from Gillysrooms from Australia

    • Barbara Welch

      Rumor has it that that is exactly how Franks, Dodd, and Emanuel became
      so wealthy, through ‘playing around’ with loans from Fannie Mae & Mac.
      Perhaps the pres is reading the writing on the wall, one term pres, might as well do something to help me.

  • Average Joe

    “a program that will allow homeowners who are “underwater” — owing more on their homes than they are worth — to refinance at today’s low interest rates.”

    Seems to me that this won’t solve the problem, but rather… make it worse. Just because they are refinancing at “lower rates”…it doesn’t change the fact that those houses are already “underwater” and that the refinance doesn’t adjust the houses to “real value” (true market value).
    All this plan seems to do, is to repeat the same mistakes that were made during the last fiasco….and dig those who do refinance, even deeper into debt.
    This is like the blind leading the stupid….or vice versa…..

    There’s a sucker born every minute…PT Barnum

  • Mike Houst

    “HARP is the only program by which borrowers owing more on their property than it is worth are given the option to refinance at a lower interest rate.”

    So they still owe the full amount, but get to take longer to pay it off? Still a heads I win, tails you lose scenario for the banks and lenders.

    Frankly, the only fair way to resolve this is to spread the misery equally. Have the homeowners refinance at the current appraised value of their homes. What they’ve paid previously is applied to the difference between the original loan value, and the current value of the property. If there’s any left over, then that is applied to the current payments, and the loan starts up from that point to the current value only. Both lose some, but the bank AND the owners are both at fault anyway for making a bad investment decision.

  • Lastmanstanding

    The more that this continues…the deeper the blood in the streets will be.

    Where will all of the politicians and bankers be then?

    • karel Eekels

      They will go underground, hiding and ” change clothes!

      • Lastmanstanding

        Karel. there will be no place for them to hide…that is how the planet works.

  • James Kirksey

    President Obama ahd his henchmen have gone to the well too many times. Soon the bucket will come up dry and no member of Congress, dare vote another bailout this near election date. Maybe his loud boasts of going on his own will prompt some act of misappropriation, forcing Congress to do its impeachment duties. Meanwhile, those communist and other Obama supporters are trying to destroy the stock market before winter forces them to seek shelter. In my country boy mind, I am seeing frustration and desperation from the White House. Any day,now, I expect to see these un-American thugs fighting each other to escape the blame for the mess they have made. However, those who committed the crimes and those, who silently watched must pay the price on November 2012. Vote them all out of our gevernment.

  • Disgusted

    This kind of stuff just pisses me off. I bought a home in 2006, but because I stayed within my budget – for this I get to continue with my regular payments and interest rate. Those that bought a home clearly out of their budget get a reduced interest rate (on my tax dollar) and help from the government so they can keep their home. Isn’t this the same thing as bailing out the banks – are they saying that person is “too big to fail” so we have to help them out. What about the rest of us. I would like a lower interest rate! I would like a smaller monthly payment! How is it that they get rewarded for stupid behavior and I get s&!+ on for being a reponsible person.
    Our government is absurd!

    • Kate

      I agree totally with Disgusted – it just does not pay to be responsible anymore. I lost $70,000 cash on the sale of my home in California this year – is the government going to give my money back?

    • Ellen

      I agree with you. My house is worth less than what I paid for it, but it will only matter if I try to sell it before prices go back up. Refinancing doesn’t change the value of the home, it simply lowers the monthly payment due to the reduced interest rate. Taxpayers shouldn’t be funding this. Years ago, I lived in Connecticut and we went through the same scenario that has been playing out nationally for the past few years. I couldn’t refinance because I was under water on my mortgage. Worse, I moved and had to sell my house for a 30% loss. I couldn’t even take the loss on my taxes. I’ve lived all of this before and no one bailed me (or any other CT resident) out. When will the Dems grasp that we don’t have money to give to people to cover these unnecessary programs? Their ‘loss’ is only on paper.

  • sean murrey ILLIniois

    the housing market will tank again using this failed program from a failed president.

  • Cliffystones

    While I think this is just a ploy on Obama’s part, a plan like this could be an upside for lenders.

    If lenders who chose to refinanced people who actually were making their payments on the higher rate mortgages, they would be less likely to have a buyer that defaults, But the Feds should not mandate or back the refinancing. The lowering of risk of default on the new loan should be the only reward for the lenders. After all if the lender chooses not to refinance, the buyer could just as easily walk away. But a lower payment would make it more likely that those buyers who believe in honoring their commitments would do the ethical thing.

  • william lee

    this does not help homeowners who are losing there homes, first you have to be current by 6 months on your payments, on a $100,000 dollar home you can,t owe more then $125,000, and who pays to refianance the homeowner or taxpayer,

  • Clint

    But you yourselves know perfectly well, that to produce the possibility of the expression of such wishes, by all the nations, it is indespensable, to trouble in all countries, the peoples relations with their governments, so as to utterly exhaust humanity with dissension;struggle;envy and even by the use of torture by starvation, by the inoculation of disease, by want so that the goyium see no other course open to them than to take refuge in our complete sovereignty in money and in all else.

    • Charlie

      Huh? Have no idea what you just said Clint. Do you?

      • Clint

        Charlie, The goyim are being manipulated into relinquishing their sovereignty. I know my comment does not relate to the above article directly. I was just trying to expose the fact that confusing the populace with an unlimited amount of issues keeps them from the root of the real problem.

  • LC

    The underwater borrower will still be underwater. Does this make any sense? Incur more fees to refinance, add them on top of the higher-than-market mortgage you currently carry, and you’re supposed to be happy?

    Some of the major economists are predicting that the market will drop another 30% or greater within the next year or two. How does this help stabilize the housing market?

    It doesn’t even begin to address the millions of people that are behind on their payments due to job loss, etc… As those people fall so far behind that they can’t catch up, their homes will go into foreclosure and be sod at pennies on the dollar.

    So I’m confused – what exactly is the purpose of this? Lip service is all it is.

  • EHeassler, USN-Ret.

    This program should be called Community Reinvestment Act Paralleled, or C.R.A.P. for short. This stupidity, along with the bundling of toxic mortgages to sell as mortage backed securities, is what caused the housing bubble and it’s ultimate collapse in the first place. People that truly didn’t qualify for an FHA or a traditional bank mortgage shouldn’t all of a sudden be qualified to refinance the same note. This administration would have us believe that everyone who goes into default on their mortgages will be living on the street. What,people aren’t willing to bite the bullet, admit their mistakes and move into an apartment or rental of some kind? Mobile homes? I’ve had to sell when the mortgage got to be too much. I dind’t like it, but I knew when I bought that it could happen. I didn’t expect the Mr. & Mrs. U.S. Taxpayer to bail me out. I finally paid off my 30 year mortage in 17 years by paying extra on the principle and not refinancing. Now the blithering Marxist in the White House thinks I should help subsidize mortgages for those who were not as prudent. Unbelievable, and I’m really steamed about it. Obama is the worst President of my lifetime. He makes Carter look prescient.

  • Jim vaughn

    I think that most of the ” qualified homeowners” who could take advantage of these new rules are government employees as they are some of the only people who have “stable” jobs as they cannnot be easily fired or laid off and are overpaid for their efforts. Another program that serves the “politial class” more than it serves the nation. No surprise there.

  • Gilly

    The underwater home owner remains underwater but the new lender gets to get cop the new immediate loss in the value of its new asset. The only people to benefit is the original lender UNLESS the new lender does a discount deal with the original lender. So without all the facts in hand to know what is really being offered to be done…there continues to be a great deal of speculation. What would a reasonable refinancer try to do with their new money and who has frames the workings of the new policy? these are some of the questions which come to mind.from Gillysrooms in Melbourne Victoria Australia.

  • jopa

    If Fannie and Freddie win in this program it’s a win for the taxpayer.This program only applies to the Fannie and Freddie mortgages.Whether you like it or not two of your names are Fannie and Freddie if you are a taxpayer

  • Gringo Infidel

    What a scam. How much money will be pocketed for this ‘advice?’ and who will get it? Chucky Schumer and his gang of lying cheats?


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