Expanded HARP -- music for housing markets?
Posted October 27, 2011
No fewer than 10 economic reports are on the docket this week – but the big story from Monday is the expansion of the HARP program that I have been discussing with you over the past couple of weeks.
HARP, which is an acronym for the Home Affordable Refinance Program, is a program that was originally designed for homeowners who were still able to make their mortgage payments, but who had been unable to refinance due to their negative equity position caused by a decrease in regional home values.
Here are a few of the updated details surrounding the program:
The biggest change is that the maximum loan to value restriction has been eliminated, meaning that it doesn’t matter how far a borrower is underwater on their mortgage. Borrowers must also be current on their payments – and may not have had any late payments in the last six months and not more than one late payment in the past twelve months. Their loan must still have been placed in the GSE portfolio prior to May 31, 2009, and they may not have refinanced since that date. The GSE Liability concern – which in the form of a “buyback provision” for lenders had been in place with the prior program – has also been removed, meaning that there should be no hesitation for lenders to offer the program to eligible consumers.
Details around the program should be delivered from FHFA to lenders around Nov. 15. If you want to read more about the HARP announcement, please go to www.fhfa.gov.
Good news for home prices across the country. According to the S&P Case-Shiller Index, 10 of 20 cities on its index saw home price increases in its latest report. That is hopefully a sign that the fundamentals for housing are beginning to improve across the country. Along with home prices increasing, we also received a New Home Sales Report which increased by 5.7 percent in September. Let’s hope the positive housing numbers continue to a make an appearance on the national stage.
In a surprise decrease this week, Consumer Confidence for October moved to a reading of 39.8, which was down considerably from the consensus estimate of 46. This could be a sign that perhaps the ailing consumer will be slowing down spending as we head into the holiday season and the new year.
Finally this week, the announcement of a European debt resolution sent Treasuries skyrocketing on Thursday. Good news for the stock market, but not good news for mortgage rates. We’ll let the dust settle on this issue and we’ll be watching next week’s unemployment report to see which way we’ll be heading for mortgage rates as we enter the eleventh month of the year.