Reagor: Revised program targets underwater homeowners

The housing market is confusing and difficult to navigate for most these days. One month prices are up, the next they are down. The same with foreclosures. In one metro Phoenix neighborhood, there are more short sales than regular sales. In another area less than a mile away, homes are selling for the asking price.

As a real-estate reporter for The Arizona Republic since 1996, I have been watching the market closely for a while. I have owned more than one home in the region. My stomach churns with other homeowners' when prices fall, and I am elated when I see even the slightest positive signs in the housing market. But it all has to be put into perspective.

Starting today, I'll be answering real-estate questions from you, often with the help of experts, at least once a month.

Question: When will the (expanded refinancing) program be available to homeowners? How do you know you are eligible? Also, are the banks being given any incentives to help homeowners who qualify for the program? Right now, it is next to impossible to get anyone from my bank on the phone to talk about my options. -- Carl S.

Answer: Since Monday's announcement by the Obama administration about the expansion of the Home Affordable Refinancing Program, I have heard from dozens of readers who want to know the same thing: Are they eligible?

Homeowners must have a mortgage backed by government-owned Fannie Mae and Freddie Mac. To determine if your mortgage is backed by Fannie or Freddie, call your mortgage servicer or go to makinghomeaffordable.gov, where you can look it up.

Homeowners must be underwater and not have missed more than one payment in the past year. Now, there aren't supposed to be any limits on how much more a homeowner owes on a house compared with what it's worth. This is known as the loan-to-value ratio. Previously, HARP capped the LTV at 125 percent, which is of little help to homeowners in metro Phoenix.

The federal government won't release all details of the program until December. But HUD and Treasury officials said this week that they would cut fees and work on other ways to get lenders to participate quickly. I will continue to follow the program and track its success or failure.

Q: How will I know when new-home prices have hit bottom? I have been looking for a new house in the Gilbert/Chandler area, and it looks like homes now cost half what they did a few years ago. -- Michelle in Tempe

A: Homebuilders are competing with foreclosure homes. They are trying to build and sell houses for the lowest prices they can and still eke out a profit. Housing analysts say it's a great time to buy a new home. In most cases, you don't have to compete with investors paying cash because they are buying foreclosure homes.

Also, the number of new foreclosures is slowing. That means fewer inexpensive homes on the market, which will stabilize prices. The number of homes listed for sale is down, so prices could climb again next year, even in the new-home market.

If you have the cash for a 10 to 20 percent down payment, interest rates are still at new record lows, making it a great time to get a mortgage if you have decent credit. But don't buy unless you plan on holding onto the house for at least a few years, housing advocates warn. No one really knows when the housing market will recover.

by Catherine Reagor The Arizona Republic Oct. 28, 2011 05:12 PM




Reagor: Revised program targets underwater homeowners