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.
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.
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 :
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.
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.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Sarah M. Office Manager
The Mortgage Reports has been an invaluable resource to me -- it helped me to pick the sweet spot to refinance. Thanks!
Katrina B. Lab Technician
I look forward to reading The Mortgage Reports. Its information and updates helped me to buy my first home. Thank you!
The Mortgage Reports is invaluable. It's our primary source for information on housing finance.
2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)