Through the Responsible Homeowner Refinancing Act of 2012 introduced by Democratic Sens. Bob Menendez (D-New Jersey) and Barbara Boxer (D-California), a new HARP3.0 would break down barriers preventing millions more from refinancing.

During a hearing on Thursday before a senate subcommittee, industry experts and leaders offered testimony on how the proposed legislation could impact the economy.

Mark Zandi, chief economist for Moody’s Analytics, delivered a testimony in which he said, “Policymakers should act to substantially increase mortgage refinancing activity.”

When first introduced, the Obama administration expected HARPto refinance between 4 and 5 million homeowners, but FHFAestimates show that since its 2009 inception, the program has refinanced close to 1.1 million borrowers as of February 2012.

In late 2011, HARPunderwent an expansion to allow borrowers with loan-to-value (LTV) ratios higher than 125 percent to apply, among other changes.

Acknowledging that it takes time for servicers to implement new changes, Zandi said in his written testimony that HARPrefinancings in early 2012 appear to have run close to 50,000 per month, up from 30,000 per month since the program began. Zandi also noted reports from the Mortgage Banks Association showing a pickup in applications for refinancing.

While these changes have helped to encourage more activity, Zandi expressed his support for more changes.

“More refinancing will mean fewer borrower defaults and more money in the pockets of homeowners, supporting the recovery through a quick and sizable cash infusion at no meaningful cost to taxpayers,” he said.

If the proposed expansions are fully implemented, Zandi said the legislation would increase eligibility to nearly 21.5 million borrowers.

Under the Responsible Homeowners Act, borrowers with LTVs lower than 80 percent and non-GSEloans would be eligible for the program. Currently, HARPonly includes Fannie Mae and Freddie Mac loans.

Overall, Zandi said the broader economy, taxpayers, and homeowners, who are expected to save $2,500 to $3,000 a year, will benefit from refinancing.

Though, Zandi does acknowledge a loss for one segment: investors in mortgage backed securities.

“While the agencies would lose some interest income on their $1.2 trillion in mortgage securities and whole mortgage loans, under reasonable assumptions that would be offset by lower default rates on refinanced loans,” he said.

In a calculation, Zandi said HARPrefinancings totaled 4.2 million, private investors would receive about $6.5 billion less in annual interest income.

While investors may not be pleased with their return due to low interest rates, Zandi said, “they were aware of this prepayment risk when they purchased their securities.”

Expanding HARP to Prevent Defaults and Stimulate Economy

Where to find reliable contractors

You're not alone if your roof is leaking and you're kicking yourself for not having called a roofer during the summer months. Most people have a limited concept of preventative maintenance. This can lead to big problems that end up being more expensive than if you had routine maintenance in place.

Many buyers don't understand that home maintenance goes with homeownership. When you rent, someone else usually pays for repairs. As a homeowner, you're responsible for keeping your home in good condition.

Unless you're handy at home repairs, it can be costly to maintain a home properly. But there is a benefit at the end of the line. Buyers pay more for homes that are well-maintained and show a pride of ownership.

It can be a hassle to properly maintain your home unless you organize and prioritize the projects that need to be done. You also need to set a schedule and stick to it.

Most home maintenance can be done annually: roof maintenance (including gutters and downspouts); sealing exterior cracks; weatherproofing; a furnace and air conditioning inspection; and inspecting and cleaning the drainage system.

Mark these events on your calendar so that they can be scheduled for about a month before you'd like to have the work done. If you wait until just before the rainy season to start your annual maintenance, you could have trouble finding good contractors to help you.

Don't wait until your roof is leaking to repair or replace it. There will be collateral damage to the interior of the house. Your homeowners insurance company might pay to repair the interior damage, less the amount of your deductible, but it won't pay to replace the roof. Too many claims could be grounds for not renewing your policy.

HOUSE HUNTING TIP: Assemble a crew of contractors and tradespeople who can help you with your home maintenance. It's not always easy to find reliable people who do good work. You'll end up frustrated and having to do more oversight if you work with people who don't show up or do the job right.

Ask your real estate agent or acquaintances who own homes in the area to recommend tradespeople to you. If the seller is happy with people who have worked on the property, ask for a list of names and contact information when you close the sale.

Homeowners who haven't the time or expertise to determine what needs to be done to keep their home in good shape could ask the home inspector that inspected the house for them to do a reinspection periodically to point out areas that need attention.

One of the keys to good home maintenance is to take care of critical items as soon as they become apparent. For instance, don't postpone repairing a plumbing pipe leak. Have it repaired as soon as you notice it.

Don't assume that because your house is new that you won't have any maintenance issues. If the gutters back up on any house, even a new house, water can leak into the house or down the inside of the walls. This, left unchecked, can lead to a major repair to the framing. If repaired right away, you may just need to seal and touch up the paint.

Likewise, even though you just had the exterior painted, you still may have areas that will need touch up every year or so, especially if they receive intense sun exposure.

THE CLOSING: Don't go for the cheapest contractor or building materials just to save money. If an inferior-quality job has to be redone sooner than anticipated, your savings will dwindle.

By Dian Hymer
Inman News®

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide." 

Closing costs can increase the price of a home by as much as $10,000, sometimes more.  Borrowers who are “cash-poor” can ask for assistance, or talk to their lender about a lender credit toward closing costs.

Making sense of the story

• Some lenders advertise that if borrowers agree to accept a mortgage interest rate from a quarter to a full percentage point higher than they would ordinarily qualify for, they can receive credit toward their closing costs.
• These mortgages are sometimes called no-closing-cost loans, though the term is misleading.  The credit usually covers only fees charged by the mortgage broker or bank, like the loan origination fee, the underwriting expense, and the appraisal.  That generally leaves title insurance, mortgage-recording taxes, insurance, and escrowed taxes to cover.
• The amount of credit depends on total closing costs and other loan details.  Generally, for every one-eighth of a point increase in interest rate, borrowers receive a credit worth half a percentage point of the principal amount.
• While these mortgages can be helpful to some, borrowers should carefully review all the details.  There are pluses and minuses to these loan types.  A downside is the higher rate and monthly payments remain in place through the life of the loan.
•  Doing a side-by-side comparison of loans with and without the credit can be helpful.

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