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Obama Administration Announces Expansion of Refinance Plan to Address Housing Market

October 28, 2011

Our Chino foreclosure defense attorneys were pleased by the president's recent announcement of a major expansion to the federal refinance program. As the Los Angeles Times reported Oct. 24, the Obama administration has announced an expansion of the Home Affordable Refinance Program, a sister to the Home Affordable Modification Program. HAMP has grabbed more headlines, in part because eligibility for HARP was limited until now. But the administration seeks to change that by lifting the cap on how "underwater" any homeowner must be to qualify, while streamlining the bureaucratic process and lowering fees. About 2 million of the 15 million underwater borrowers nationwide could be helped, the article said.

HARP addresses the refinancing problem faced by anyone who bought a home during the most recent real estate bubble. Interest rates are currently at historic lows, and lenders are far less likely to use the kinds of subprime and exotic loans they were giving out at the height of the bubble. Thus, homeowners can save significant money and get out of bad loan structures by refinancing their loans -- but in order to refinance, they need equity. And many people's equity disappeared with the housing crash, leaving them owing far more than the homes are worth. To address this, HARP permits people who owe at least 80 percent of their home's value, but with no upper limit, to refinance through Fannie Mae or Freddie Mac. Participants must be current on their loans, have missed no more than one payment in the last 12 months and have loans owned or backed by Fannie Mae or Freddie Mac as of May 31, 2009. Certain fees to borrowers are reduced or eliminated, and the government is waiving certain legal requirements for lenders.

The plan has come under criticism from several quarters as inadequate, in part because it does nothing for people who are behind on their mortgages. Housing rights advocates and some economists are calling for the government to launch a principal reduction program instead, which they believe would help far more borrowers. As Fountain Valley foreclosure defense lawyers, we have read plenty of studies supporting that idea -- but we know that the idea is a political nonstarter. If Congressional Republicans are willing to kill the idea of cramming down loans for people in personal bankruptcy, they're unlikely to support cramdowns for the much broader group of those who don't need bankruptcy but have underwater mortgages. As another Times article noted, this program does not need Congressional approval and can therefore be enacted without serious delay, which may be its greatest value.

Based in Anaheim, Howard Law, P.C., represents people across California who are struggling for loan modifications or to address an unfair foreclosure. In the housing downturn, many loan servicers have become "foreclosure factories" that push borrowers into the foreclosure process regardless of their circumstances or chance to avoid foreclosure. As a result, people who aren't appropriate foreclosure candidates, or believe they could stay current with a loan modification or other help, often get ignored or subjected to broken promises and repeated delays. Our Gardena foreclosure defense attorneys can help. Sometimes, just getting a lawyer involved is enough to show the servicer that your case requires actual attention; other times, a lawsuit is required to allow an impartial judge to sort out violations of your rights.

If you believe your loan servicer isn't giving you a fair chance to avoid foreclosure and you're ready to explore your legal options, call Howard Law today. You can contact us through our website or call toll-free at 1-800-872-5925.

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