Mortgage Daily

Published On: September 19, 2016

Seven years after the height of the housing bust, South Floridians still “underwater” on their mortgages could qualify to refinance under a government program that touts an average statewide savings of nearly $200 a month.

Originally set to expire Dec. 31, the Home Affordable Refinance Program has been extended to Sept. 30, 2017, giving borrowers more time to find relief from burdensome loans.

In Palm Beach, Broward and Miami-Dade counties, 7,177 borrowers qualify for the program, known as HARP, according to the Federal Housing Finance Agency. Statewide, more than 37,600 people are eligible, the agency said.

HARP launched in 2009, during the housing crash, for owners whose home values had plummeted far below what they owed on their mortgages. The program reduces interest rates, allowing owners to cut their monthly payments or pay off the loans faster through shorter-term mortgages.

Since then, more than 3.4 million people nationwide, including 320,555 in Florida, have refinanced through the program, figures from the housing agency show. As of the first quarter of 2016, the average monthly savings for Floridians was $191.52, the agency said.

To qualify, a homeowner must be current on a mortgage that’s owned by Fannie Mae or Freddie Mac. Among other requirements, the loan must have been originated on or before May 31, 2009, and the homeowner can’t have more than 20 percent equity in the property.

The agency recently launched a public awareness campaign to inform homeowners about the benefits of HARP.

Many don’t know about the program, or are “reluctant to tinker with their mortgage,” even if they can achieve significant savings, said Megan Moore, special adviser to agency Director Mel Watt.

“Coming out of the financial crisis, a lot of homeowners think the offers they’re getting to refinance are a scam,” Moore said. “HARP is not a scam.”

Ryan Paton, president of Capitol Lending Group in Fort Lauderdale, said he has clients who used the program to refinance from 30-year to 15-year mortgages with little or no difference in their monthly payments.

If the owners stick with 30-year mortgages, their payments can drop considerably and they can use the savings to pay off their principal faster or apply it to other debt, Paton said.

Underwater homeowners may have tried to refinance in the past without using HARP and are still leery of being denied, Paton said.

“There are so many people out there who can do it, but don’t know it,” he said. “It’s such an easy process to look at.”

Those who bought or refinanced at or near the peak of the housing boom from 2004 to 2006 quickly saw values plunge during the ensuing meltdown.

Some homes lost up to half of their values, leaving owners owing far more on their mortgages than the properties were worth.

Many owners couldn’t sell because they didn’t have tens of thousands of dollars to pay off the mortgages. That led to more foreclosures and a worsening of the housing crisis.

By the time prices hit bottom in late 2011, close to half of the 840,000 mortgage holders in the tri-county region were underwater, according to the Zillow real estate website.

With prices increasing steadily since then, the percentage of underwater borrowers has dropped sharply.

In the second quarter of 2016, 11.8 percent of South Florida mortgage holders, or about 99,000 people, still owed more than the home is worth, according to Zillow.

Across Florida, 12.7 percent of homeowners (380,000 people) were underwater as of the second quarter, Zillow said. The national average was 12.1 percent.

Aaron Terrazas, senior economist for Zillow, expects many people still underwater to see their equity return in two to three years.

The sense of urgency surrounding HARP has waned now that the housing market has healed and prices continue to rise, he said.

“HARP was designed at a very specific moment in time in the worst years of the housing crisis,” Terrazas said. “It was designed as a crisis measure, but we’re not in the throes of a crisis.”

While the program is a panacea for eligible homeowners, critics have said it’s reaching only a fraction of the underwater borrowers in South Florida and across the state because eligibility requirements are too restrictive.

Sean Snaith, an economist at the University of Central Florida, said many otherwise-deserving borrowers don’t qualify for HARP because of “bad luck” — not having a Fannie or Freddie mortgage.

HARP should be more inclusive so that homeowners who bought at the wrong time through no fault of their own can get relief, according to Snaith.

“The program is probably not as all-encompassing as it could be,” he said. “If you want to lessen the burden on households, [expanding the eligibility requirements] seems like the way to do it.”

To see if you qualify for the Home Affordable Refinance Program, visit .

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