We could see a big HARP 2.0 change that puts homeowners closer to HARP 3.0 by the end of 2013.
The possible confirmation of Mel Watt (D., N.C.) as the new new head of the Federal Housing Finance Agency (FHFA) could be the deciding factor that ushers in changes to the popular HARP 2.0 program. Watt could be confirmed in a vote to be held as soon as December 9, 2013.
Why is Watt’s confirmation important? He is seen as more sympathetic to homeowner aid than the current director, Ed DeMarco. Watt could be quickly roll out HARP 2.0 reforms.
The first “baby step” toward HARP 3.0 that Watt could revise the current HARP cutoff date of May 31, 2009.
As it stands, a loan must have a note date (closing date) of May 31, 2009 or before to qualify for HARP. It’s a seemingly arbitrary date, but it’s probably kept hundreds of thousands of homeowners from refinancing with HARP, also known as the Home Affordable Refinance Program.
One of Watt’s first moves as the new director, assuming he’s confirmed, could be to push forward the cutoff date to sometime in 2010, even as late as December 2010. That would mean borrowers who closed loans from June 1, 2009 to the end of 2010 could become eligible for HARP.
Homeowners could save money every month with a HARP refinance, considering that interest rates in 2009 and 2010 were between the high-4% to mid-5% range.
To date, over 2.88 million homeowners have refinanced with HARP. During 2012, the average homeowner saved $250 per month.
Related: A HARP 3.0 Pilot
HARP 3.0 Just Around the Corner?
Watt’s implementation of HARP 2.0 changes could be a win-win-win for FHFA, the White House, and home owners. Underwater home owners would save and spend more money, spurring the economy. Mortgages would become more affordable, reducing foreclosures and bolstering housing market prices, which are goals of the FHFA and the Obama Administration.
What’s more, moving the cutoff date could be the first step to a full implementation of HARP 3.0, where jumbo loans, non-Fannie Mae and non-Freddie Mac loans are allowed to participate.
Millions of homeowners would refinance, but they are both underwater, and have loans that are not owned by one of the mortgage giants. These homeowners have been locked out of the HARP program since its inception, simply because they do not meet current guidelines.
If Mel Watt is confirmed as the new FHFA head on December 9, it’s very feasible that the arbitrary HARP cutoff date could be moved by year’s end, if not even further steps toward HARP 3.0. His confirmation could mean a very welcome break for countless homeowners who have been locked out of a HARP refinance.