HARP's unintended consequence

I always assumed the Obama administration housing platforms such as the Home Affordable Refinance Program (HARP) were intended for people who were having trouble staying in their homes due to sucker mortgages, home devaluations and/or loss of employment.

I also inferred from panicky news presentations that the incidents of foreclosures were so vast, numbering in the multimillions, that the banks were having trouble just getting to everyone who needed help.

As one e-zine article noted about HARP and loan modifications, "many homeowners have complained that this path of hope is virtually a dead end. Many people are not getting the help they were promised due to specific qualifying criteria and lengthy turnaround times for processing modifications. Unfortunately, the government can't afford to bailout everyone."

So, I was very surprised when I picked up my telephone one day in early November and noted a voice-mail message from Wells Fargo Home Mortgage telling me that I qualified for a HARP loan and asking whether I wanted to see about refinancing.

Now I do have a Wells Fargo mortgage, but it's not on my primary residence. I live in Arizona and own a condominium in Concord, N.H., which I rent to my sister. When she decided to move to New Hampshire from Florida because her two daughters lived in the state, it was easier for me to buy the condo than for her because she was retired and it would have taken a lot of her savings.

Wells Fargo Home Mortgage was a good company to work with and the process went smoothly. The condo wasn't very expensive and, if I remember correctly, I put down almost 25 percent of the total purchase cost. That was about three years ago. Fortunately for me, the Concord condominium market wasn't very intensive or overbuilt so the value of the condo unit has been maintained (no appreciation), but my investment wasn't imploding either.

In short, the mortgage wasn't in trouble and neither was I, the borrower. So, why was Wells Fargo Home Mortgage contacting me about a HARP loan? Actually, the bank was very aggressive about communicating with me because a few days after the call I received a letter from the bank as well.

The letter opened this way: "If you think you can't refinance and you're concerned about missing out on today's historically low mortgage interest rates, now may be the time to act. The Home Affordable Refinance Program is helping more homeowners like you refinance, even if your loan balance exceeds the present value of you home -- up to 105 percent."

I was curious why Wells Fargo was contacting me about all this, so I called the person who left me a voice mail. After exchanging pleasantries, I asked, "What makes me available for a HARP loan?"

The answer was very simple: My loan was backed by Freddie Mac. If a loan is a Fannie Mae or Freddie Mac vehicle, you are almost always eligible for HARP, said my telephone correspondent.

To show the Wells Fargo employee I knew something of what was going on in the world, I said something to the effect, "Obviously, with the government taking over Fannie and Freddie this type of mortgage seems pretty darn secure, which means most any bank would want to deal with it." ...CONTINUED

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