June 26--Amid flagging interest for the Home Affordable Refinance Program, Fannie Mae and Freddie Mac are taking their pitch on the road, with the first stop in Chicago next month.
Mel Watt, director of the Federal Housing Finance Agency, is scheduled to meet July 8 in Chicago with community groups and housing experts, one of several events that Fannie and Freddie's overseer will conduct across the country to draw attention to the five-year-old refinancing program.
In the Chicago area, more than 33,000 homeowners may qualify for HARP because they meet criteria that includes having mortgages with more than 10 years left on them, with balances of more than $50,000 and with interest rates that were at least 1.5 percent above current market rates, according to the FHFA..
Launched by President Obama shortly after he took office in 2009 to help underwater borrowers, 3.1 million homeowners nationally have refinanced their mortgages under HARP.
Despite changes made to the program in 2012 to widen the pool of potential participants, the number of refinancings has significantly dropped, to almost 20,000 loans nationally in April, from almost 107,000 loans in April 2013, according to a FHFA report. HARP is slated to end in December 2015.
The large local pool of potential participants -- more than any other metropolitan area -- doesn't surprise local housing advocates. Nor are they surprised that there hasn't been more uptake of the program.
Home price recovery has been slower to take hold in the Chicago area, and it has varied greatly by community, which means many homeowners remain underwater on their mortgages and unable to arrange a traditional loan refinancing.
At the same time, though, there are concerns that homeowners are burned out from the paperwork snafus and runaround that have accompanied HARP and the Home Affordable Modification Program.
"There's fatigue," said Spencer Cowan, a vice president at Woodstock Institute, a Chicago-based public policy and research group. "You put in a lot of effort, going to counseling, trying to get your ducks in a row, submitting paperwork and having it misplaced. After a while, it's easy to imagine people getting very discouraged with the process."
James Rudyk, Jr., executive director of the Northwest Side Housing Center, noted that federal-government-approved housing counseling agencies like the center are designed to work with borrowers whose mortgages are behind or in danger of falling into default. HARP is aimed at current borrowers who are unable to otherwise refinance their mortgage to a lower interest rate.
"People don't know what HARP is," Rudyk said. "We've had maybe less than five calls in the last six months. All of our outreach is to those already in default."
As part of its outreach effort, the FHFA created an interactive map on HARP.gov that shows the number of loans still eligible loans for the refinance program.
According to that map, almost 19,400 of the estimated Chicago-area mortgages loans that could qualify for HARP are in Cook County. Another 2,600 are in DuPage County, 2,200 are in Kane County, 2,880 are in Lake County, 1,570 are in McHenry County and more than 3,000 are in Will County.
"We know that there are hundreds of thousands of borrowers who can still benefit from HARP and are essentially leaving money on the table by not taking advantage of the program," Watt said in a statement.
To be considered eligible for the program, borrowers must have a conventional loan guaranteed by Fannie Mae or Freddie Mac that was originated before June 1, 2009, and have less than 20 percent equity in the home.
Borrowers also cannot have had any late mortgage payments within the last six months and no more than one late payment in the past 12 months.
Follow @mepodmolik Follow @chibreakingbiz
(c)2014 the Chicago Tribune
Visit the Chicago Tribune at www.chicagotribune.com
Distributed by MCT Information Services