Terrel L. Shields
Elite Member
- Joined
- May 2, 2002
- Professional Status
- Certified General Appraiser
- State
- Arkansas
I am talking about HARP, not your situation. HARP is a program administered by FHFA. They are NOT a private company, they are a federal agency who TOOK OVER fannie and freddy, for all practical purposes. Fannie and Freddy were supposed to be INDEPENDENT but were not allowed to fail.
Yes, HARP could make it easier for folks to pay off underwater loans. It does keep them from defaulting PERHAPS...not always. But the really "bum" loans made that should be clawed back by fannie or freddy cannot now be clawed back under HARP. Any loss is stood by F & F...i.e.- us - AND FHFA costs money. It's budget is close to $200 million alone. What part of that is HARP? 10 cents? It's still taxpayer money.
Freddy and Fannie's exposure DOES CHANGE. The borrower may be less risk to default - saving a chunk on interest does generally translate into fewer folks going into default. BUT, these were all PERFORMING loans by definition. You cannot get HARPed if you are in arrears significantly. So F/F makes less money on interest ... and perhaps more importantly, if the loan was made thru say, Chase, and Chase had an inflated appraisal, or it was a liar loan, then Chase could be forced to buy the loan back and eat the loss, whereas Fannie mae would not be out much, if any money.
Once you have been HARPooned, then freddy and fannie can no longer clawback that loan should it still go bad. Thus all the loans that are in HARP that default will cost F/F which is basically a government owned agency and thus, we the people are paying for it day by day....
Read FHFA own website where they brag about how they are reducing the losses to the taxpayer...that suggests to me that they are losing money, it is just a matter of how much. Will HARP cost more than doing nothing? I don't know if anyone can answer that for decades to come. It has certainly made things easier on the banks who made those bum loans.
Yes, HARP could make it easier for folks to pay off underwater loans. It does keep them from defaulting PERHAPS...not always. But the really "bum" loans made that should be clawed back by fannie or freddy cannot now be clawed back under HARP. Any loss is stood by F & F...i.e.- us - AND FHFA costs money. It's budget is close to $200 million alone. What part of that is HARP? 10 cents? It's still taxpayer money.
Freddy and Fannie's exposure DOES CHANGE. The borrower may be less risk to default - saving a chunk on interest does generally translate into fewer folks going into default. BUT, these were all PERFORMING loans by definition. You cannot get HARPed if you are in arrears significantly. So F/F makes less money on interest ... and perhaps more importantly, if the loan was made thru say, Chase, and Chase had an inflated appraisal, or it was a liar loan, then Chase could be forced to buy the loan back and eat the loss, whereas Fannie mae would not be out much, if any money.
Once you have been HARPooned, then freddy and fannie can no longer clawback that loan should it still go bad. Thus all the loans that are in HARP that default will cost F/F which is basically a government owned agency and thus, we the people are paying for it day by day....
Read FHFA own website where they brag about how they are reducing the losses to the taxpayer...that suggests to me that they are losing money, it is just a matter of how much. Will HARP cost more than doing nothing? I don't know if anyone can answer that for decades to come. It has certainly made things easier on the banks who made those bum loans.
