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Refinance program targets 'underwater' homeowners

March 13, 2012 12:00:00 AM PDT
More help for financially strapped homeowners: a new federal program goes into effect this month. It's a new version of HARP, the Home Affordable Refinance Program. It will especially benefit people who owe more on their homes than the homes are worth.

Like millions of American homeowners, Laurie Davies' Laguna Niguel condominium has dropped dramatically dropped in value. So much so it has been difficult to refinance down to today's historically low interest rates.

"I'd actually tried a couple other places, including my mortgage company, and I didn't have any luck trying to refinance," said Davies. "They had said that with stipulations and income and things like that, it wasn't there."

But then Davies found Intercap Lending of Irvine, one of the few lenders approved to offer the federal government's Home Affordable Refinance Program (HARP).

The first HARP program, now two years old, has not been as successful as the feds had hoped, but on Monday a new version of the program will start, called HARP 2.0.

The biggest difference is no matter how much your home is underwater you may still qualify for a refinance.

"In some cases you'll have an appraisal waiver, meaning no appraiser will visit your home at all," said Marc Bailey, Intercap Lending. "About 1.6 million in California alone [qualify]; nearly 700,000 just in Orange and L.A. count[ies]."

Some qualifications: Your home loan must be guaranteed by Fannie Mae or Freddie Mac and sold to them before June 2009. Also, you must be current on your present loan for the past 12 months.

Antonio Perez is CEO and executive director of RESCUE (Real Experts Serving Communities Utilizing Education), a non-profit organization that helps folks get a loan modification. Perez says even if people don't qualify, RESCUE may be able to help.

"We want to put everybody in a 2.0 if they qualify. If they don't, we put them into a loan-modification process," said Perez. "If they don't qualify for that, we take them to a short sale."