HARP Plan Changes Just More Government Insanity

You just cannot make this stuff up, at least not in the real world. However, in the so called reality that is the political realm of Washington, D.C., anything is possible.

Yesterday, the administration announced changes to the Home Affordable Refinancing Program (HARP) that are no better than those that were in place back in the heyday of NINA liar loans. You remember those. Well, under this program, things are eerily similar. No credit review, check. No appraisal per se, check. Limited equity, check. Been late in the past on your mortgage payments, check. Whoopee, you are approved, check.

Oh and by the way, let's not stop just there. Let's also put the taxpayers on the hook if it doesn't work out like we plan, check.

Finally, I saw Franklin Raines (former Chairman/CEO of Fannie Mae) on one of the Monday afternoon business shows touting how great an idea he thought this was going to be. Need I say anymore? In my opinion, I don't think so.

Here's the changes they have released so far. More are set to come prior to November 15th.

• The program is offered to borrowers whose loans were sold to Fannie Mae and Freddie Mac on or before May 31, 2009, with current loan-to-value (LTV) ratios greater than 80%. The program should start around December 1st.
• Removes the current 125% LTV ceiling for fixed-rate mortgages. Word is the new max will be up to twice the current value of the property.
• The maximum loan amount is what is currently outstanding on the existing mortgage.
• Eliminates a new property appraisal if there is a reliable AVM (Automated Valuation Model) estimate provided by Fannie Mae or Freddie Mac.
• One late payment within six months, or more than one in the past year, would mean disqualification.
• Eliminates certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowers fees for other borrowers.
• It's voluntary for lenders. A bank remains free to reject a refinancing even if a homeowner meets all the requirements.**
• Extending the end date for HARP until December 31, 2013.

Please note the ** item above.

Can anyone say epic fail? Big check.