Ask Kate about Obama Refinance Plan

by Kevin in Salinas, Monterey County, California

Ask Kate about Obama Refinance Plan: Hi Kate, I currently make my mortgage payments to a nationwide lender. I have contacted them to refinance my mortgage following a divorce. It's very frustrating dealing with them. I've never missed a payment, but I'm struggling. I don't qualify for any programs they offer (HARP or Making Homes Affordable) because my mortgage is neither Fannie Mae or Freddie Mac backed.


Kevin continues... I'm upside down with the home value of $240,000 with a loan balance of $302,000. My current 30 fixed rate is 6.12%. I'm hoping for a rate reduction, not a principle reduction.

Kate Answers: Obama Refinance Plan

***zz-portrait-left.shtml*** Dear Kevin,

Because the Making Home Affordable flagship, HARP refinance, is restricted to Fannie Mae and Freddie Mac mortgages, many homeowners just like you are left out in the cold with no opportunity for refinancing mortgages in excess of the worth of homes they lien.

So during his January 2012 State of the Union Address, Blueprint for an America Built to Last, President Obama revealed his refinance plan, claiming no more red tape and no more run around. Listeners were left wondering if the speech was merely speculation yet others were filled with hope.

In spite of an estimated 2 million plus homeowners who cannot take advantage of HARP refinance, the large banks are not throwing their support behind the Obama Refinance Plan because they would be required to cover the cost with the proposed Financial Crisis Responsibility Fee.

Even so, here are proposed guidelines of the Obama Refinance Plan:

  • Primary residences with less than 20% equity.

  • Maximum mortgage to mirror FHA county loan limits.

  • Minimum credit score of 580.

  • No late mortgage payments during the most recent 6 months.

  • No more than one late mortgage payment in the past year.

  • Employment verification of wage earners.

  • Mortgage must have been securitized before May 31, 2009.

  • Restricted to mortgages not backed by Fannie Mae, Freddie Mac or FHA.

Homeowners participating in the proposed Obama Refinance Plan would discover:

  • No appraisal would be required.

  • No income would be verified.

  • With loan terms of 20 years or less and without a significant increase in monthly house payments, mortgage closing costs would be paid on behalf of the homeowner, saving an estimated $3000 per qualified borrower.

Will Congress approve the Obama Refinance Plan?

In reality, the Obama Refinance Plan needs more than the okay from Congress to get placed into action, even though the President claims it will not add a dime to the deficit. The large financial institutions will need to get on board too. But considering the $5 to $10 billion price tag would be paid mainly by the banks through the proposed Financial Crisis Responsibility Fee, it's easy to predict an uphill battle.

Find out more about the Obama Refinance Plan at Is HARP 3.0 Fact or Fiction. ***zzz-link-harp3.shtml*** As the HARP 3.0 plan unfolds, I will continue to update my Readers with this opportunity for struggling homeowners. Follow my Best Mortgage Rate Blog for the latest mortgage news.

Good luck and best wishes,


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Harp 3
by: Tom Cogle from La Plata, MD


Any news on Harp 3 as of today (Sept. 5, 2012)? My mortgage was sold to Freddie on June 1, 2009, just one day short of the deadline for Harp 2.

Thanks, Tom

Hi Tom, Kate here. One day? That hurts. Sadly, there is no substantial news about the release of HARP 3.

I'd end with that but I have to repeat what I've been saying. If you haven't already, write your elected officials on your state level and in Washington DC. Of course, I don't know their motivation for a fact, but I strongly suspect the HARP 3 proposal is being tossed around for political gain. Homeowners have been put through the wringer the last few years and do not deserve to be used as pawns.

Watch my blog for the HARP 3 announcement. I'll be all over it, believe me!

Best wishes getting an affordable mortgage payment, Kate

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