The Atlanta Journal and Constitution recently reported that the federal government will unveil yet another new program to help resolve the foreclosure crisis in this country (click here to read the full article). This new proposal will make changes to the Home Affordable Refinance Program (HARP) which was introduced in 2009. Just like all of the other programs unveiled to this date, this program will not help all consumers who own a house that is underwater.
The AJC reports that this new program will allow Georgia consumers to “shrink their payments and stay in their homes by reducing barriers to refinancing mortgages held by federally backed lenders Fannie Mae and Freddie Mac.”
What about those consumers who have mortgages that are not backed by the federal government? I guess they are still out of luck if they want any help reducing their mortgage balances.
The AJC goes on to report that more than 30 percent of Georgia consumers (or 500,000 homeowners) owe more money on their house than it is worth. The article reports that John Bartholomew, an Atlanta attorney for Legal Aid, states that this revamped HARP program will not help his clients because in order to qualify for HARP, the Georgia consumer must be current on all mortgage payments.
Georgia consumers can refinance their mortgage under HARP if they meet the following criteria:
1. The consumers mortgage must have been purchased by Fannie Mae or Freddie Mac before May 31st, 2009.
2. Consumers must be current on their mortgage payments.
3. They must have a loan to value ratio of greater than 80 percent.
4. The mortgage must not have been previously refinanced under HARP.
I conclude that these changes to HARP will have a minimal impact on the foreclosure crisis that is gripping all of Georgia. As a Georgia bankruptcy attorney, the biggest problem I see is homeowners who have mortgage payments that are too high. Unfortunately, Chapter 13 does not currently allow you to reduce your future mortgage payments. Loan modification programs have been too complicated for most consumers to complete. The denial of loan modifications by mortgage companies seem to be arbitrary.
The foreclosure crisis is not getting better. In fact, it seems to be getting worse.
If you would like to read about a real solution to the national foreclosure crisis, read Why a Mortgage Cram Down Bill Is Still The Best Bet to Save the Economy.