What Will Harp 3.0 Mean For Homeowners After 2014?

As economic influences affect the housing market in the United States, there has been the introduction and development of programs to assist with the downturn.

During the 2009 economic crisis in the United States that resulted in home prices and values falling, a program named HARP was introduced to assist the many affected homeowners.

Harp has since developed and a 3.0 version has been introduced. As a result, many homeowners are beginning to wonder: What will Harp 3.0 mean for homeowners after 2014?

The Economic Crisis: Harp 1.0 In 2009

In 2009, HARP 1.0 was introduced. The program was designed to help homebuyers who couldn't refinance their homes because of the sudden and significant dip in home values.

It was open to borrowers with loans that were taken out prior to May 31, 2009, and other requirements made the program available only to homebuyers with a good payment history and a loan-to-value ration of 125 percent, meaning that the borrower could not receive a loan of over 25 percent of the home's total value.

This program came to help some homeowners who were affected by the economic downturn, but wasn't available to those in the foreclosure centers in particular areas of California, Nevada, and Arizona.

Harp 2.0: Redefined Assistance

In October of 2011, Harp 2.0 was introduced with changes that helped to make the program more helpful to homeowners who were in trouble as a result of the financial and housing downturn.

The 125 percent limit on the loan-to-value of the Harp 1.0 program was removed, allowing those with significant value drops in their homes to receive help as well. Changes were also added to allow borrowers to refinance investment properties, and borrowers were allowed to switch lenders to shop around for a refinance under the Harp 2.0 program.

Harp 3.0 For Homeowners In 2014

Though the previous Harp programs have assisted over three million homeowners since the financial downturn, there are still many homeowners in need of assistance. With nine million homeowners in a financial crisis after the 2009 economic downturn, there is still much that can be improved upon to help assist in these circumstances.

The Responsible Homeowner Refinancing Act of 2013, which is widely referred to as Harp 3.0, is one approach to solving the problem.

The Harp 3.0 program has been presented, and, if passed, will lower the fees involved. This means that need for appraisals will be lessened, making the program more widely available to homeowners experiencing financial difficulties, and there will be greater ease in the underwriting process.

The Harp 3.0 program, if passed, would also not be constrained to only loans owned by Fannie Mae or Freddie Mac, as restricted in Harp 1.0 and 2.0. The new version of the Harp refinance program means that homeowners with sub-prime mortgages may become eligible, too.

With the media covering the possibility of Harp 3.0 in 2014 and many homeowners anticipating its availability, which might finally mean their eligibility for refinancing, there is a great chance of significant financial improvement and progress for homeowners. Getting refinanced is exactly the progress many homeowners have been awaiting.

For more information on the Harp 3.0 program, talk to your mortgage professional today.

Ignore The Case-Shiller Index; Focus On The Future Instead

Last week, Standard & Poor's released its Case-Shiller Index for December 2010. The index is a home valuation tracker, meant to meausure the change in home prices from one period to the next.

December's Case-Shiller Index showed major devaluations nationwide. As compared to December 2009, on a year-over-year basis, home values fell in 18 of the Case Shiller Index's 20 tracked markets, and the U.S. National Index dropped 4 percent overall. 

The retreat puts December's home values at similar levels as compared to early-2003.

That said, buyers and sellers in the Northern Virginia area would be wise to take the findings lightly. The Case-Shiller Index is inherently flawed. As such, its results are neither practical -- nor relevant -- to everyday Americans.

There are 3 Case-Shiller flaws, in fact.

The first flaw is the index's limited sample set. Wikipedia lists 3,100+ municipalities nationwide and we can be certain that real estate is bought and sold in all of them. The Case-Shiller Index, however, measures just 20 of them. That's less than 1% of all U.S. cities. And then, within those tracked cities, Case-Shiller reports an average, lumping disparate neighborhoods and streets into one big number.

The "national figures" aren't really national, and the "city data" doesn't apply to your home, specifically.

The second Case-Shiller Index flaw is how it measures home value changes. The index only consider at "repeat sales" of the same home, so long as that home is a single-family, detached property. Condominiums, multi-family homes, and new construction are ignored in the Case-Shiller Index.

Because distressed properties account for such a high percentage of resales lately -- 36% in December --foreclosures and short sales skew Case-Shiller Index worse.

And, lastly, the Case-Shiller Index is flawed by "age". Because it reports closed sales a 60-day delay, December's Case-Shiller Index is measuring the values of home sales contracts from September and October. The Case-Shiller Index, therefore, is a snapshot of the not-so-recent past, and does little to tell us about the next 60 days.

Overall, the Case-Shiller Index is helpful tool for economists and policy-makers, but it doesn't do much good for individual homeowners across the city of Bethesda or anywhere else. For accurate, real-time housing data in your local market, talk to a real estate professional instead.