Loans offer hope to underwater homeowners


Underwater on your mortgage? You may not be stuck. There are special loan programs for virtually every type of loan, whether it is backed or insured by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Department of Veterans’ Affairs.

Since the government Home Affordability Refinance Program was created in 2009, it has undergone a series of enhancements that allow more homeowners to take advantage of it, and there are hints of more to come.

To be eligible for HARP, the loan must be owned by Fannie Mae or Freddie Mac. Luckily, the overwhelming majority of loans in this country are.

Those who qualify for the program can receive significant benefits.

James Phelps, a Vancouver, Wash., homeowner, recently refinanced his Fannie Mae loan on the HARP 2.0 program and saved $484 per month, even though his loan was 141 percent of the current value.

Homeowners who have been declined once for a HARP loan should be encouraged to try again.

For those who have a loan backed by the U.S. Department of Housing and Urban Development, the government wants you to pay less interest every month, and doesn’t care how much your house is worth. Requirements are much easier than those of other loan programs because there is no income or asset documentation, no appraisal, and overall credit history is not taken into consideration, other than the fact that there can be no mortgage payments more than 30 days late in the past 12 months. FHA loans are assumable.

For anyone who has served in the U.S. military and is fortunate enough to have a VA loan, the government has an additional benefit in the form of the VA Interest Rate Reduction Refinance Loan (IRRRL). Like the FHA Streamline refinance program, the IRRRL typically does not require an appraisal.

Mitch Merwin, also of Vancouver, lowered the interest rate on his mortgage and converted his 30-year loan into a 15-year loan, saving about $130,000 over the life of his loan.

There is certainly a method to the government’s madness in creating the helpful conditions that allow homeowners to refinance their underwater mortgages.

Further, the monthly savings for homeowners as a result of refinancing often goes directly into stimulating the economy because they are able to make purchases they wouldn’t ordinarily be able to make.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking or

Gabe Terreson, branch manager of Home Team Funding, is a 17-year industry veteran who conducts training for mortgage consumers and real estate brokers. He can be reached at 360-993-5800, via email at or online at


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