Rebuilding American Homeownership Pilot Program (RAHPP) : The “Merkley Mortgage” Launches April 2013
A new refinance program for underwater homeowners has been approved for field testing.
The "Merkley Mortgage", named for U.S. Senator Jeff Merkley, will give qualified, underwater homeowners in Multnomah County, Oregon access to new, lower mortgage rates.
If the Merkley Mortgage program succeeds, it could be a blueprint for refinance programs nationwide -- including HARP 3.0.
What Is The "Merkley Mortgage"?
The "Merkley Mortgage" is mortgage refinance program based on an idea first proposed by U.S. Senator Jeff Merkley. Its official name is the Rebuilding American Homeownership Pilot Program (RAHPP).
Merkley had introduced his refinance plan to address federal efforts including as the Home Affordable Refinance Program (HARP), which may be failing to reach their initial promise.
If you'll recall, at its 2009 launch, the HARP program was expected to give 7 million U.S. households access to new, lower mortgage rates. In its 4 years of existence, however, there have been just 2 million HARP closings nationwide.
HARP is due to expire at the end of this year.
Via Merkley's program, eligible homeowners would be able refinance from high-interest rate mortgages into a new, low-interest rate mortgages without the hassle or scrutiny of a traditional refinance; and without having to have a Fannie Mae- or Freddie Mac-backed mortgage.
Merkley Mortgage Available Beginning April 2013
Eligible homeowners can soon start using the Merkley Mortgage; the U.S. Treasury Department has approved it for a pilot run, set to begin in April 2013.
The program's minimum eligibility criteria requires that :
- Your home must be "significantly" underwater
- You must intend to stay in your home for at least 5 years
- You must not own any other residential property
- You must be current on your mortgage
The Merkley Mortgage carries other eligibility standards, too. Most notably, in order to use it, you must be a resident of Multnomah County, Oregon.
Multnomah County is one of Oregon's 36 counties, and its most populous. Multnomah County is home to Portland, which is Oregon's largest city and the 29th largest city in the United States.
Residents of other Oregon counties and the other 49 states are not yet eligible.
But, for those who are, refinancing is expected to be simple. Homeowners will be offered a choice of two mortgage products from which to choose -- a 30-year fixed rate mortgage at 5% or a 15-year fixed rate mortgage at 4% -- and the rest will handle itself.
The state will fund the program using its $10 million share of the U.S. Treasury Department's "Hardest Hit" fund.
Will HARP 3.0 Resemble The Merkley Mortgage?
Via the Merkley Mortgage, there is no requirement that your mortgage be backed by Fannie Mae or Freddie Mac; or, that your mortgage pre-dates May 31, 2009. Homeowners with negatively-amortizing Option ARMs and sub-prime-like loans are eligible, as are homeowners with 30-year fixed rate loans.
The Merkley Mortgage pilot program is geared at homeowners who are underwater, but unable to use today's available home loan programs. If the pilot program is deemed a success, it could serve as a model for future underwater mortgage programs, including HARP 3.
HARP 3 talks have been picking up momentum in Congress.