Dear Fellow Mortgage Industry Professionals,
I know that the industry is in a fit over what to do with the HARP 2.0 program, but I would submit to you, that the findings I received today for my customers on the new LP Relief Refinance Program are the exact reason why we should make sure we can close and fund these loans without further dawdling over reps and warrants and technical issues we've had more than enough time to work out by now.
For the sake of privacy, I will call these customers Mr. & Mrs. A. In 2007, after three years of searching, and following the advice of financial advisers, they put 20% of hard earned money down, had plenty of cash reserves, and hoped for a reasonable return on their investment in their dream home assuming a 2-3% annual rate of appreciation that historically has been the norm.
Little did they know that by the time their house was built, values were topping out a 60% increase in just over 4 years in Pima County. This fact that went unnoticed since we value residential real estate on a 90 day time period without looking at historical price valuations to even out spikes that don’t match up to economic fundamentals.
The entire housing industry was selling the economic fallacy that housing values never go down, and Mr. & Mrs. A. had no reason to assume that they were speculating on a very high priced house. Even if they were, they felt an extra sense of security knowing they had put 20% down on the house.
Since the down turn starting in 2007, and after 5 years of trying to refinance their house, including 3 years I have been trying to find a way to help them, I have an LP Streamlined Accept, with an HVE value of $217,000 and an LTV of 127%.
Despite all of the downturns in housing and the economy, Mr. & Mrs. A. have maintained impeccable credit scores, a respectable amount of savings considering the four children they lovingly care for, and stand to save over $300/month from this refinance.
Imagine how far $3600/year will go with a family of 6!
I can only hope that we will deliver on the incredible promise this program has to help customers like the As by allowing them to complete this refinance using the Freddie Mac accepted HVE value--rather than subjecting them to the random slot machine pull that is the AMC appraisal system.
They have a deficit of $169,000 from the price they paid for their house at purchase to the HVE value I pulled today. Allowing them to save $3600/yr seems like a small concession for the lending industry to make considering the losses they have taken since they purchased their house.
I have seen loan modifications given to borrowers who put 0% down payments on their homes during the same time period who are now paying 2% rates, most of whom were 90 days late on their payments at the time the modification was granted.
I think it is time we gave home owners like Mr. & Mrs. A. the opportunity to save money at current rates in the high 3s/low 4s since they have proven after 4 years their ability to repay despite the year after year loss of investment value in their home.
I hope that Mr. & Mrs. A. will be one the first success stories we share together for the HARP 2.0 Relief Refinance.
Perhaps we will be able to say "this is the day we started turning things around in housing by helping people who are severely underwater, but have shown the ability to repay their mortgage to, obtain payment relief".