All Things Financial Planning Blog

Can You Refinance Your Underwater Mortgage?


On October 24th President Obama announced a new plan to help borrowers refinance their existing mortgages to new loans with lower interest rates and cheaper monthly payments.

The plan is an expansion of the current program called HARP, The Home Affordable Refinance Program initiated in 2009 to let homeowners refinance their mortgages to lower rates. This new expansion is meant to help borrowers who are current on their home mortgage payments, but cannot refinance because they do not have enough equity in their home, or are underwater – which means they owe the bank more than their home is worth. According to CoreLogic, a real estate data firm, approximately 22.5% of U.S. homeowners are underwater representing about 11 million.

When the Obama administration launched HARP in 2009, it was hoped that the program would help 4 to 5 million homeowners. But as of August 31st fewer than 900,000 homeowners had been assisted by the program. The Obama administration hopes that this expansion will help as many as 800,000 additional homeowners. But will it help struggling homeowners and strengthen the housing market – a market that is a corner stone to any sustainable economic recovery.

Many believe that this new opportunity to refinance will be most helpful to those borrowers that owe less than their original mortgage, but not the 20% or more in equity that banks now require. But the program is primarily aimed at borrowers that are current in their mortgage payments, but owe more than their homes are worth – underwater. The problem since 2009 with the “old” HARP is that banks are under no obligation to refinance a mortgage underwater and this does not change with this new plan.

So are you eligible to refinance your mortgage – even if you are underwater? If you have a mortgage loan backed by Fannie Mae or Freddie Mac you may qualify for the refinancing program if your loan was sold to Fannie or Freddie BEFORE June 2009. You can find out if your loan was sold by going online at  or If your mortgage was refinanced over the past 2 ½ years, you will not be eligible for refinancing – you probably already have a good interest rate anyway. Additionally, you MUST be current on your mortgage. One late payment in the past six months or more than one in the past year makes you ineligible.

What are the new program changes? Homeowners may be eligible no matter how far their home value may have fallen. Some fees for closing, title insurance and other processing fees will be eliminated making refinancing less expensive and the number of homeowners that will need appraisals will be reduced. This biggest incentive for banks – they won’t have to buy back the mortgages from Fannie or Freddie as they previously had to do, even if the bank considered the loan risky. This change alone may spur banks to work with people sincerely trying to keep their homes. Fannie and Freddie are due to release the full details of the plan on November 15 and the program could be offered as early as December 1, 2011.

If you believe that you may be a candidate for this expanded refinancing program, plan to contact your bank in the coming weeks to determine if they are willing to work with you to lower your monthly payments. This additional help for homeowners is long overdue, but it will take some time to see if this enhanced program will be a success.

Pamela SandyPamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors
Cleveland, OH

Author: Pamela Sandy, CFP®

Pamela Sandy, CFP® is founder of CONFIANCE, LLC, Financial & Investment Advisors. Since 1991 Pamela has offered her clients investment advice and financial planning services, but more importantly a professional partnership that centers on the belief that trust is the basis of any true relationship. The firm name, CONFIANCE is the French word for trust. Her clients include professionals, entrepreneurs, entertainers, and individuals living around the country and traveling abroad. She believes passionately that the financial planning profession is essential in the lives of not only the affluent, but those everyday individuals and families faced with important financial decisions affecting their lives. Based upon her belief that the financial planning community has a role to play in advocating for America's families, in June 2009 Pamela authored a white paper entitled, A Profession at Risk. The paper presented her view that the profession must use its collective voice to represent the interests of the investing public. She serves as a board member of the Northeast Ohio Chapter of the Financial Planning Association, where she chairs the Government Relations Committee, and is a member of the Public Issues Advisory Committee, a workgroup of the Financial Planning Association, national.

30 thoughts on “Can You Refinance Your Underwater Mortgage?

  1. Pingback: | Blog | Can You Refinance Your <b>...</b>

  2. I have a 2006 Alt A loan from Wells Fargo Bank at 8.375% fixed rate, 30 years. I have never been late once. I am also a 69 yr old female veteran with a 44 yr old disabled son. I have tried for two years to get America’s Servicing Co, owned by Wells Fargo to lower my interest rate. I have not asked for a reduction in my principle even though my house is now over 20% under the mortgage amount of $120,000 that I owe. There is no PMI insurance on the loan and it is held in their own portfolio. They won’t help me at all. I keep explaining that I have too much debt to income to qualify for a regular mortgage. Does this new program starting Dec 1st, 2011, help me. The VA can’t help me refinance to a VA loan.

  3. Buying a home, no matter what market we’re in, can be a very stressful endeavor. Not only can searching for the right home be a challenge, but the process of getting approved for a home loan can be so daunting that it’s enough to keep potential borrowers away from even thinking of buying a home. The good news is that with a little bit of preparation and organization, you can be well on your way to getting that loan you need to close on your new home.

  4. Pingback: Will rate cut stimulate mortgage refinance? Mortgage « Mortgage Rates Co.

  5. Pingback: Refinance in Ormond Beach, Florida « Mortgage Rates Co.

  6. Pingback: How to Refinance Home Mortgage Loans at the Lowest Rate « Mortgage Rates Co.

  7. I was more than happy to discover this site. I wanted to thank you for your time due to this wonderful read!! I definitely appreciated every little bit of it and i also have you bookmarked to look at new stuff on your website.

  8. Thank you a lot for sharing this with all folks you actually know what you are speaking
    approximately! Bookmarked. Kindly also consult with my website =).

    We could have a hyperlink trade arrangement between us

  9. My relatives all the time say that I am wasting my time here at net, except I know I am getting experience everyday by reading thes good articles or

  10. I’m gone to tell my little brother, that he should also go to see this web site on regular basis to get updated from latest news.

  11. If the mortgage loan holder goes insolvent you will make
    your payments as usual. Although they may be sent to the court.
    Later on the court will sell off your mortgage to another company
    and you will pay them monthly.. Your residence is still your home as long as you can confirm you
    have made your payments (keep your bank records to show your checks have been processed.

  12. Signing mortgage paperwork can be stressful. Advanced terms, endless forms, and fine print can make understanding the process impossible. However, educating yourself on the basics can save you time and money.

  13. Do you think it’s possible to translate this post to other languages like Spanish? This would probably reach another large portion of people today that may not find it in English. Do you think it’s possible?

  14. This piece of writing gives clear idea in support of the new
    users of blogging, that in fact how to do blogging.

  15. My brother recommended I might like this website.
    He was emtirely right. This post actually made my day. You can not
    imagine just how much time I had spent for this information!


  16. For example, if a person person is paying attention to classic a single room,
    as opposed to other person can tune in to rock
    music within the other room at the same time. Add for this some comfortable
    home theatre seating, and also you’ve come as close to your real place of art or concert hall as it is possible
    to possibly get. And you are able to get that sound
    from your right home audio cables.

  17. A full size desk provides you with several square feet of table top space.
    Complementary Continental Breakfast The complimentary breakfast is located in
    the Il Fornio restaurant, (just a hop & skip across the street in
    the Pine Inn), consists of a lovely buffet spread.
    The TV mount rails affix to the back of the TV, and the TV is
    lifted and hooked onto the mount.

  18. Professional backdrop stands can be quite costly, unless you make your own.
    The great advantage of these as gifts is that they are
    widely available at any video store, there are almost always some on sale (even well after
    Christmas) and they are relatively cheap. Obviously, the gift you
    choose will depend on your budget and what your special lady likes.

  19. Buyers can get the cheapest or even free products and services.
    To many, World of Warcraft is a wonderful game, and I won’t take that away from
    them. In such playoffs, as this, many of gamers
    on the net come jointly into one practical game as well as interact with all other in form
    of gaming different roles.

  20. Hi there, just became alert to your blog through Google, and found that it is truly informative.
    I am gonna watch out for brussels. I will appreciate if you continue this in future.
    A lot of people will be benefited from your writing. Cheers!

  21. Thanks for sharing your ideas. The one thing is that learners have a
    solution between national Home Mortgage Rates Canada as well as a private Home Mortgage Rates Canada where it’s easier to go for Home Mortgage Rates Canada debt consolidation Mortgage Rates Canada than with the federal Home
    Mortgage Rates Canada.
    One thing is that if you find yourself searching for a Home Mortgage Rates Canada you may find
    that you’ll want a co-signer. There are many circumstances where this
    is correct because you might discover that you do not employ a past
    Mortgage Rates Canada history so the Mortgage Rates Canada lender will
    require that you’ve got someone cosign the financing for
    you. Thanks for your post.
    Thank you for this article. I’d also like to say that it can end up being hard when you are in school and starting out to initiate a long Mortgage Rates Canada score.
    There are many college Homes who are only trying to make
    it and have a protracted or beneficial Mortgage Rates Canada history
    can occasionally be a difficult matter to have.
    I have learned some important things as a result of your post.
    I would also like to state that there is a situation where
    you will have a Mortgage Rates Canada and do not need a co-signer such as
    a National Home Aid Mortgage Rates Canada.
    But if you are getting financing through a traditional Mortgage Rates Canada provider then you need to be
    made ready to have a co-signer ready to assist you.
    The lenders will certainly base their decision over a
    few variables but the main one will be your Mortgage Rates Canada rating.
    There are some financial institutions that will additionally look at
    your job history and come to a decision based on this but in many instances it
    will be based on on your Mortgage Rates Canada score.
    One other issue is when you are in a problem where you don’t have a co-signer then you may want to try
    to make use of all of your federal funding options.
    You can get many grants or Mortgage Rates Canadas
    and other scholarships that will present you with funds that can help with institution expenses.
    Many thanks for the post.

  22. But it is not so good for drying food, since it takes less than 200
    degrees to dehydrate food. A slide-out crumb tray is included for easy
    cleaning. Keeps food moist – The sealed bowl ensures that those healthy and flavour enhancing aromas
    stay within your food.

  23. You need to make sure you buy through the right company to ensure not only quality, but
    a very big discount. Over time Breville has evolved into a legendary brand.
    It includes a filter system that could be the same as
    the conventional coffee makers.

  24. If the glove gets messy, you can wash the glove in cold
    water with a mild laundry detergent. Brownies are always yummy, but this brownie dessert tops them all with the added peanut butter.

    If you are in a similar situation, read on and I will explain the process I went through to wire my new oven.

  25. Hmm is anyone else experiencing problems witgh the images on this blog
    loading? I’m trying to determine if its a problem onn my end or if it’s the blog.
    Any feed-back would be greatly appreciated.

  26. Really when someone doesn’t know then its up to other viewers that they will help,
    so here it happens.

  27. I am really loving the theme/design oof your weblog.
    Do you ever run into anyy intenet browser compatibility problems?
    A couple of my blog readers have complained about my website not working correctly in Explorer but looks great in Chrome.

    Do you have any suggestions to help fix this problem?

  28. Hello there, I found your site by the use of Gogle even as searching for a similar matter, your web site
    came up, it seems to be good. I have bookmarked itt in my google
    Hello there, just was ware oof your blog thru Google, and located that it’s
    truly informative. I’m going to be careful for brussels.
    I’ll appreciate in case you continue this in future.

    Many folks will probably be benefited from youir writing.

  29. Ideas which can do justice to the emotions associated with every event.
    Make sure you keep informed about any and every product
    you buy for the baby because of the fact that you may have looked publications and pamphlets that there are always reminders of unsafe
    product being advertised because a paper is confirmed unsafe
    for children and infants with what probably can be transformed
    into an article risky for them to manipulate or play, and watch for the new as it is made available and ensure complete your product registration information if needed
    and snail mail it in or submit it on the line to keep in the loop when a callback never occurs.
    Educators receive dozens of gifts for just about every gift-giving occasion.

  30. I don’t evn know how I finished up right here,
    butt I believed this submit was good. I ddo not recognise who you’re but definitely yoou are going tto a well-known blogger for those
    who aren’t already. Cheers!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s