Underwater Homes: The Unsinkable Story


As rising real estate prices grab headlines, discussion of homeownership retention programs like the Home Affordable Refinance Program (HARP) has faded. But the Federal Housing Finance Agency, which runs HARP, is hoping to catch the ear of about 13,000 troubled Valley homeowners who are eligible for the program.

Nearly 50 percent of Nevada mortgages are still underwater, according to the economic research firm Applied Analysis. HARP, rolled out in 2009, was designed to help those who are current on their home payments but who—because of decreased home value—are unable to refinance at a lower interest rate. The program’s early incarnation had a sluggish debut, because it only allowed refinances up to 105 percent of a home’s value. But it got a boost in late 2009 when it lifted the cap to 125 percent. In 2011, the cap was removed altogether.

The program has another glitch in that the mortgage can only be refinanced if it is owned by Fannie Mae or Freddie Mac and was sold to either agency before May 31, 2009. Efforts to establish a HARP 3.0 that eliminated the Fannie or Freddie ownership requirement didn’t gain much steam in Congress earlier this year.

Nevertheless, FHFA estimates about 13,000 Las Vegans qualify for either HARP 1.0 or 2.0, and could reduce their monthly payments. Some local real estate experts say too many homeowners have given up.

“People feel that everything that comes out is not going to work for them,” says Rebecca Gray, a Realtor with Realty One Group. “Instead of jumping in and getting the facts, they’ve heard all the horror stories from their neighbors. There’s lots of hearsay.”

More than 50,000 Nevadans have refinanced through HARP, which expires at the end of 2015. For more information, visit HARP.gov.