Will a revised HARP Program really work? (Las Vegas)

Mortgage and Lending with Primary Residential Mortgage

Will a revised HARP program really work for us here in Las Vegas? Will it work Nationwide in CA, FL, AZ, etc...

Lets look at the numbers (basic scenario)...


Lets say an average house right now has a mortgage balance of $200k, and their rate is 5.875%. Thus their principle and interest payment is $1183.08. If you refinance to today's conventional rates at 4.875% (today's rate is about 4.25% but their will be rate adjusters because of the LTV) the principle and interest becomes $1058.42.

This saves the average homeowner $124.66 a month or $1495.92 a year. 


Is $1495.92 savings a year enough to save someone from foreclosing or short selling on a house they know is worth half of what they owe?

Yes, it is great that a refinance program will be available for those who are greater than 25% upside down on their house (current HARP program), but will this really solve the problem? 

Another Band Aid and great political tool to use for re-election time?

Don't forget, when we refinance a customer, it sets them back to a 30 year term and all the interest is being paid in the first 10 years of the loan. 

Secretary Donovan's comments of saving the average homeowner $2400 a year seem a bit off. 

A Revised HARP program for the nation sounds good, but still not the answer for Las Vegas and other severly hit housing markets. 

Comments (3)

Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-755-2905

Joseph, very very good points, here. You spelled it out concisely. I don't have that come out in our community much at all, so it's good to listen and read someone else's perspective in another market to see how it helps/hinders or simply has no lasting effect.

Nov 02, 2011 11:56 AM
Kathy Toth
Ann Arbor Market Center Keller Williams - Ann Arbor, MI
Ann Arbor Real Estate Experts - Kathy Toth Team

The market here in Michigan, at least around the Ann Arbor, Washtenaw County area seems to be on a positive upswing.  Let's hope it stays that way.  Think positive.  Any homeowner helped by the program that really wants to stay in their home will be a good thing.

Nov 02, 2011 12:12 PM
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Why would you want to re-finance when you can not make a payment for 2 yrs and pocket the monthly payment ? That's the avg. time according to LPS for any action is taken to foreclose.

Based on your numbers $1183.80 x 12mo. = $14,196.96. Over 2 yrs that comes to: $28,393.92. Hey, look at this, default wins out over re-fi...

More BAD policy to punish those that save, do without to make mortgage payments. Ain't America Great.

Besides, look at the hit to the economy will take if we didn't have defaults. That extra monthly cash is taken out of the retailers pockets. Another positive is with the re-fi's it will give the GSE's & Lenders the opportunity to clear up those pesky title problems MERS created. New Note Signed...

Nov 02, 2011 05:06 PM