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Mortgage debt relief on the way?

By: Ken Paglia, Telegraph Correspondent
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An expanded federal program will soon allow some severely underwater homeowners to refinance at today’s historically low interest rates. President Obama’s 2009 Home Affordable Refinance Program, or HARP, originally permitted homeowners to refinance if they were less than 125 percent upside down. But in October, that upper limit was lifted. Banks are now figuring out how to implement the revamped program, and are aiming to make it available to consumers on March 17. “HARP is a great boost because it should lower mortgage payments for those who have been stuck with higher interest rates. Everyone could use a few hundred dollars a month raise,” said Jeff Eberhart, a Loomis-based mortgage consultant who has done dozens of HARP loans for Northern California clients. Homeowners who are less than 125 percent upside down can take advantage of the program right now, and those over 125 percent should wait until March 17. To qualify, an owner’s first mortgage must be owned or insured by Fannie Mae or Freddie Mac, and obtained by them before May 2009. Borrowers cannot have missed any mortgage payments in the past six months, and not more than one payment in the past year. Homeowners with a second mortgage can take advantage of HARP as long as the second lien holder approves the refinance. Matt Sundermier, a consultant at Bentley Mortgage in Folsom, touted HARP as a timely relief for responsible homeowners who have “toughed it out” and continued to make payments despite a sour economy. “The only downside I see to HARP is that it doesn’t include everyone,” Sundermier said. Roseville homeowner Vince Santucci, one of Eberhart’s clients, was 155 percent upside down on his first and second mortgage combined, admitting he “didn’t think it would be possible” to refinance. But last February he applied, and in less than 30 days saw his interest rate drop. “It went pretty seamlessly, and I can’t complain about saving money,” said Santucci, 43, a state employee. Of course, HARP isn’t a silver bullet, and doesn’t help homeowners get above water on their loans. A loan modification including a principal balance reduction is still the only way to get out from being underwater, and today’s lenders aren’t volunteering to do that, according to those in the business. “The reality of today’s mortgage crisis is that the only people who will get relief are those who are willing to walk away from their loans and stop making mortgage payments,” said Eberhart. So while HARP may not be the end-all, be-all solution, it most certainly offers a bit of a lifeline, he said. “It allows people who have been making their mortgage payments on their home that is worth less than what they owe to finally take advantage of the ridiculously low interest rates, and will hopefully keep one more homeowner from going into default and adding to the foreclosure crisis,” said Eberhart. Jeff Eberhart can be reached at jeff@fpfnorcal.com.