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Real mortgage help is on the way

Loans: New program HARP 2.0 will arrive in March for homeowners

Posted: January 28, 2012 1:55 a.m.
Updated: January 28, 2012 1:55 a.m.

Martin Rodriguez, left, of Prospect Mortgage and Mayra Santana of Sunrise Dream Realty consult with client Jorge Rivas.

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So, the interest rate on your $400,000 home loan jumped up last year, and your payments are killing you.

You can barely afford to feed the kids, let alone get their “awkward” dental alignments in order. And when they whistle through their teeth, “Tsay Dad, are we going to loosth our house?” you, of course, reply “No” … but you really aren’t so sure.

What’s further killing you is that you know there are some very good interest rates available out there, rates that could bring your monthly payment back down into the survivable range.

But the problem is, your home is now worth $50,000 less than you owe on it. You’re underwater, or upside down, or whatever, and no one will give you a refinance.

Well, hang in there, brother, help is on the way.

According to Martin Rodriguez of Prospect Mortgage in Valencia, HARP 2.0 might solve your problem.

 

HARP 2.0

HARP is the federal government’s Home Affordable Refinance Program, and the latest version of it, which will take effect on March 17, will feature a number of improvements over the earlier version.

Most importantly, according to Rodriguez, HARP 2.0 “will take the lid off equity.”

That means that even if you currently owe significantly more than your home is worth, you could be eligible to refinance your loan at an attractive interest rate.

“You have to be current on your mortgage,” Rodriguez said, “and you have to be able to afford your new payments.”

And he said the rumor is that you might not even have to have your home appraised.

Rodriguez, a real estate finance specialist with Prospect Mortgage, which he said “is the largest privately held direct lender,” explained that the typical SCV homeowner has a good income, good credit and plays by the rules, but that many of these homeowners are “stuck in the situation where they are upside down and can’t take advantage of lower interest rates.”

HARP 2.0 could help them, but only if their mortgage is owned by Fannie Mae or Freddie Mac.

He said many home loans that originate with banks end up being purchased by these federal entities, and he said his website will provide links you can use to find out if one of them owns your home loan.

Rodriguez said the actual details of HARP 2.0 will be available soon, but that the banking industry should get behind the program, as it protects the banks.

“The bank will originate the loan (the refinance), then hand it back to Fannie Mae or Freddie Mac,” he said.

 

Get relief

Rodriguez gave an example: For someone with a $400,000 loan, at 6 percent interest, his current monthly payment might be $2,398.

With a refinance to 3.875 percent, that payment would go down to $1,880 per month. That’s a savings of more than $500 every month. And all this, even if the home is only worth $350,000 in today’s market.

“This allows people who are upside down to be able to afford to stay in their homes until the value catches back up,” Rodriguez said.

But he added that there is no “loan forgiveness” involved with this.

You will still owe the full amount of your loan and, should you decide to sell before your home’s value gets back up, it would have to be a short sale.

Rodriguez said all of this is becoming possible because of the political pressure on the mortgage industry to stabilize the real estate market.

“It was the real estate market that brought us down,” he said, “and it is the solution to bring us back up.”

“We’re starting to see the basis of a stability beginning to form,” Rodriguez said. “I don’t know if we are at the lowest point of the market or not, but I do believe Santa Clarita is getting stronger. Things are starting to pick up.”

And he added, “I believe that when we start to see the economic rebound, Santa Clarita will lead the charge for L.A. County and the state of California.”

This is because, “In the SCV we have a tremendous employment base, it’s a very desirable area to live in, and it’s close to L.A. for commuting.”

 

Upside down?

For those upside-down homeowners whose loans are not owned by Fannie Mae or Freddie Mac, Rodriguez said that, unfortunately, their options are limited.

To get a lower interest rate, they would have to pay down the principal to a level where they can refinance.

“You can always engage your bank in a discussion for a loan modification,” he said. But he noted that, unless you are in default, there is no incentive for the bank to provide a loan mod.

If you are not under Fannie Mae or Freddie Mac, and if you truly can’t afford the rate you are at, Rodriguez said, you might discuss the situation with a Realtor in regard to negotiating a short sale.

“Foreclosure should be the last option. It’s not good for anyone — seller, bank or your neighbors,” he said.

 

Not upside down?

Rodriguez said that if you aren’t upside down in your home loan but still need a lower interest rate, you should speak with someone who can assess your home’s value. And, if you have equity, good credit and good income, you can follow the standard procedure for obtaining a refinance.

However, he noted that there is a lot more paperwork involved these days, and you need someone to steer you through the process.

“Do your due diligence. Ask for personal references, and get referrals from family and friends,” he said. “I also believe in verifying that people are licensed for what they are doing.”

Check the NMLS (Nationwide Mortgage Licensing System & Registry) to see if they have any legal infractions.

 

Rates stay low

Rodriguez said he expects home loan interest rates to stay low, especially in an election year, as no one wants to rock the boat at this time. And he added that the federal interest rates won’t be reset until 2013, anyway.

So now is the time to get your personal ship righted.

Do whatever you can to get your head above water and stay in your home.

Rodriguez said that will do us all good.

“Real estate affordability is tied to business and industry,” he said. “In the SCV, we live where we work and we work where we live.”

You can reach Martin Rogriguez at Prospect Mortgage, 25124 Springfield Court, Suite 100, Valencia, CA 91355. The phone number is (661) 244-5896 and the website is www.loansbymartin.com. Use the website to link to other sites where you can find out if your home loan is owned by Fannie Mae or Freddie Mac.

jwalker@the-signal.com

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