Refinance Help Coming For Underwater Homeowners

BLAINE, Minn. (WCCO) — Standing in the yard of the Blaine home they have owned for the past nine years, Kipper and Samija Wilson have done the math on their current mortgage.

“Six-and-one-eighth right now. The last time we figured it was like $500 a month,” Kipper said.

That’s how much they figure they could save each month if they could refinance their mortgage. Currently, mortgage rates are hovering around 4 percent for a 30-year fixed-rate loan.

But like 18 percent of Twin Cities homeowners with mortgages greater than the current market value of their homes, the Wilson’s were told that refinancing wasn’t possible.

“We looked into it but since our property values dropped we would be stuck with a private mortgage insurance premium (PMI). It would cost us like $20,000 to refinance, not worth it,” he said.

That should change under a revamped Home Affordable Refinance Program (HARP) that the Obama administration is rolling out beginning Dec. 1.

Those wanting to refinance a conventional mortgage owned by Fannie Mae or Freddie Mac, will find it easier to qualify.

The current ceiling of a 125 percent loan-to-value limit is being dropped. In addition, loans with private mortgage insurance will now allow for that insurance to transfer to a new loan. Finally, homeowners with second mortgages or home equity lines of credit will no longer be disqualified from refinancing.

“That’s what HARP II is going to try to address, some of those issues and help homeowners that way,” said mortgage consultant Steve Rice.

Rice is a broker with Marketplace Home Mortgage in Coon Rapids. He said homeowners should begin the process by knowing which kind of loan they have. Only conventional loans underwritten by Fannie Mae or Freddie Mac will qualify under the HARP II.

Still Rice says, even homeowners with VA or FHA mortgages can take advantage of historically low rates.

“They have to meet certain guidelines, live in the home and still be current on their payments. But it’s a great way that I can lower someone’s interest rate and no appraisal is required,” he said.

For information on determining if your mortgage is a conventional loan with Fannie Mae or Freddie Mac use the following websites — or

More from Bill Hudson
  • Underwater

    What abou those who bought homes with 80/20 mortgages 5-10 years ago, what help is for them?

  • Obv

    I’m fine with letting people who never refinanced their homes do it, but the people that took interest only loans out, expecting to sell and move on time and again and keep seeing profits I have no remorse for there actions, what kind of chimp thinks values would rise for the rest of their lives. How did they think they would ever own a home when they were older, paying interest only on a 100k-200k300k loan.

  • Dave

    buying a home with an ARM is a bad idea… are intrest only

    • Me

      I disagree. It all depends on the terms. Our FHA ARM can never go up or down by more than one point at each adj period. It’s actually gone down over the last three adjustments. We’re at 3.5 right now.

  • FirsTrust Mortgage


  • accidental resident

    We qualify on our current payment, underwater mortgage, but what we really need is a waiver from the City of Minneapolis that will allow us to rent out the homestead house we have paid for and lived in for the last 8 years. It’s been good enough for us to live in, we have made improvements but we watched our property value decline due to fraudsters, and now the city has their hand out, too. Come on, Minneapolis, work with us underwater owner/occupiers.

  • Laura

    Still no relief for us – our house has lost tons of value, we do not have a fmfm guaranteed loan, both our credit scores are near 800 (never missed a payment on anything in my life), and we can’t refinance :(

    • El Latino

      you are not alone! we are in the same boat.

  • Lori

    They say there is help for FHA mortgage carriers, but it’s nearly impossible to qualify. How is it fair when those of us with the same issues are not being offered equal offers. We have to stand by and watch all these others get these great rates. Why are they not seriously offering help to FHA mortgage carriers? They say they are but it’s all smoke and mirriors.

  • accidental resident

    If it sounds too good to be true, it usually is. I called BoA today to refi under the HARP II terms, and was told that the program has been pushed back till January 2012.

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