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New program will refinance underwater mortgages with no appraisals

Matt Hamilton has dutifully paid the loan on his Maitland house and a Longwood rental condo, but until now he could not refinance them to obtain more-affordable interest rates because the properties are financially underwater.

Starting Thursday, Hamilton and many of the other millions of residents with "underwater" mortgages in the United States can apply for a new Fannie Mae and Freddie Mac refinance program geared for pretty much everyone who owes more on a home than it's worth — including landlords and second-home owners.

"It's been difficult because I'm so far in the hole that no one wants to refinance me," said Hamilton, a product developer for Longwood-based Onlinelabels.com. "But if you look at my payment history, I am a safe risk."

The federal government's previous foreclosure-prevention efforts, such as the Home Affordable Modification Program (HAMP), lowered the interest rates on mortgages of homeowners at risk of foreclosure because they had lost income. But the new Home Affordable Refinance Program (HARP) is seen as a possible game changer even for homeowners who are underwater but who have stayed employed and continue making their payments.

Homeowners who have missed mortgage payments in the past six months need not apply. And not all the details — such as loan limits — have been disclosed yet. But this is one of the first refinance programs that doesn't require an appraisal to determine the value of the house.

The HARP application process begins Thursday, just as new reports show that almost half of the mortgaged homes in the Tampa Bay area are saturated with more debt than they are worth. In all, more than 300,000 mortgaged homes in the bay area are in that situation, according to a report released Tuesday by the mortgage-research company Corelogic.

About 44 percent of the mortgaged houses in Florida, and 22 percent of those in the nation, were underwater in the third quarter, Tuesday's report said.

One cautionary note about HARP: Interest rates could change by the time a qualified property owner's refinancing application is processed, said Travis BeMent, mortgage-loan originator for Home Loans Today of Orlando. Fannie and Freddie are not expected to have the ability to process the new loans until as late as next March.

But HARP, he noted, also offers a break to homeowners who want to refinance for 15 or 20 years instead of 30 years. To qualify, an owner must have a mortgage backed by Fannie Mae or Freddie Mac and will likely need a credit score of at least 620.

Who's eligible?

Those whose loans are owned or backed by Fannie Mae or Freddie Mac, which the government took control of two years ago. Fannie and Freddie own or guarantee about half of all U.S. mortgages — nearly 31 million loans. To qualify for refinancing, a loan must have been sold to Fannie and Freddie before June 2009. Homeowners can determine whether their mortgage is owned by Fannie or Freddie by going online: Freddie's loan tool is at freddiemac.com/mymortgage; Fannie's is at fanniemae.com/loanlookup. Mortgages that were refinanced over the past 21 /2 years aren't eligible. Homeowners must also be current on their mortgage. Perhaps the biggest obstacle: It's voluntary for lenders.

New program will refinance underwater mortgages with no appraisals 11/30/11 [Last modified: Wednesday, November 30, 2011 10:44pm]
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