Is there now a government program to help “underwater” condo owners refinance at a lower interest rate?

Posted on Mar 10, 2013 in HARP Refinance

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Question by JIM: Is there now a government program to help “underwater” condo owners refinance at a lower interest rate?
I purchased a South Florida condo back in 2005 during the height of the real estate boom. Obviously, buy my property is now worth far less then what I still owe, even though I put 12% down and financed with a 30 year fixed. My rate is 6.25% and I am hoping to refinace while rates are lower to, at least, lower my payment and allow me to put a little more equity in each month. I live in Broward County Florida and purchased for 183,000, making my loan total 161,000. I have been on time with all payments and even tried to sqeak out a few extra dollars each month, but still owe over 140,000 after almost 7 years of payments. Condos around me are bearly selling for 70k right now and it is frustrating, after all this time and all the payments I have made, to be so far upside down. I still keep trying though and do not want to be one of the Florida property owers that just walks away because the situation is difficult. I have heard on TV that the politicians are going to “bail us out” and “allow underwater owners to refi”, but I have not recieved one dime’s worth of help and everytime I go to refi the bank wants to send out an appraiser and tells me they can only refi 80% of what the property is currently worth. Those numbers obviously do not make it possible to refi. I am hoping there is some kind of goverment refi program for owners that have paid on time, have good credit and want to dig themselves out of this without forclosure or bankruptcy. Is there such a program or refi organization for Broward County condo owners? Where would I contacxt them?
Based on the first rely to this question, I think there is a misunderstanding as to what I am asking. I am not looking for any favors. I have made every monthly payment for the last 7 years, including the years I knew the property was worth less then the amount I owed. I have maintained good credit my entire life. As long as God keeps me employeed and I am physically able to, I intend to pay all my bills including my mortgage. I mentioned “bailout” because of all the hype on television due to the housing crisis, but my main question was how to refinance. I only hope to lower my monthly mortgage payment based on the current interest rates, that have evolved due to the current economy. I know there are options, like not paying my mortgage and attempting a short sale, forclosure and bankrupcy, but this is what I am trying to avoid. I am trying not to be a burden on my neighbors even though many of my other neighbors have taken the easy route, walked away and left the condo assoc
Ok, I think HARP was the answer I was looking for. I do not want to just increase the number of years on my mortgage, and I do not expect any debt reduction, but being allowed to modify to the current interest rates seems fair to me…any other comments are welcome also 🙂
Ok, I think HARP was the answer I was looking for. I do not want to just increase the number of years on my mortgage, and I do not expect any debt reduction, but being allowed to modify to the current interest rates seems fair to me…any other comments are welcome also 🙂

Best answer:

Answer by Ed Fox
Imagine you took $ 10,000 into a casino and lost the lot. Would you expect the government to “bail you out”?
All over the world, house purchase is a gamble and homeowners cannot realistically expect to be “bailed out” by their government. Where does government money come from? The taxpayers. Why should you expect your fellow citizens’ tax dollars to be used to save you from your failed gamble?

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2 Comments

  1. You can try HARP. Not refinance, but modify loan to drop interest rate. Refinancing is impossible when you are underwater without bringing money to the table.

    The help will not be in the form of giving you money, or reducing what you owe, but in lowering the interest rate to today’s rates in order to lower your payment.

  2. HARP is short for Home Affordable Refinance Program. There is also HAMP, the modification program which was designed for people having difficulty making payments and is clearly not what you are looking for. If your loan is owned by FNMA or FHLMC, the latest version of HARP allows you to refinance regardless of underwater status on your home, and often does not require a new appraisal. A link to the website where you can check is posted below.
    Not every lender offers the program, and some that do offer the program do not promote it and do a terrible job of keeping their employees informed on the program. A few months ago I refinanced a client who had first gone to his current lender but was denied due to a current appraised value that would have put his mortgage at 83% of appraised value. He qualified for the HARP program and they failed to even offer it to him though their website said they had it available. In their infinite wisdom, the government has put serious limits on banks ability to advertise the HARP program so many people that may qualify don’t know it exists..
    Assuming you qualify, you should be able to reduce your payment and pay your loan sooner with a 20 year term, or with a 15 year term keep your payment very close to the current amount. Unfortunately, if too many of your neighbors have walked away from the HOA it can make it more difficult to meet conforming guidelines necessary to qualify for this loan.

    If your have an FHA loan, they have offered the Streamline Refinance program for decades and it does not require a new appraisal so underwater status will not matter. In June they are reducing the Up Front and Annual Mortgage Insurance for loans that were endorsed by FHA before 6-1-2009.that will make it even more attractive.

    http://www.fanniemae.com/loanlookup/
    https://ww3.freddiemac.com/corporate/