Raymond G. (Jerry) Leveille is the senior vice president and chief lending officer at Greenwood Credit Union. With more than 40 years of banking experience in Rhode Island, Leveille joined Greenwood Credit Union in 1999 as consumer lending manager. He is also a trustee of the June Rockwell Levy Foundation.We caught up with him to talk about the federal Home Affordable Refinance Program run by the Departments of the Treasury & Housing and Urban Development. HARP is designed to help let consumers get a new, more affordable and stable mortgage.
PBN: What does the Home Affordable Refinance Program accomplish?
LEVEILLE: HARP helps homeowners refinance their mortgages, even if they owe more than the homeâ€™s current value. The HARP program has been around for some time. Recent changes to it by Congress now allow a mortgage holder in the Freddie Mac and Fannie Mae program to refinance their homes at todayâ€™s lower rates, even if there is no equity in the house.
PBN: How about an example?
LEVEILLE: If someone bought a house in 2005 and financed it for $200,000, say 80 percent with no private mortgage insurance and the balance today is $193,000. Since then, the value could have dropped so that they owe more than what the house is actually worth. Their 2012 loan to value ratio would be over 100 percent.
Their mortgage rate right now could be [more than] 6.5 percent. Those loans can now be refinanced at todayâ€™s low rates [around 4 percent] without private mortgage insurance. That would help people who are struggling with their mortgage payments.
PBN: If the loan to value ratio is unlimited, doesnâ€™t that increase the chances of taking on bad debt?
LEVEILLE: For Freddie Mac and Fannie Mae itâ€™s not increasing their exposure, they are already there. The program is for loans already with FM&FM, so the loan to value ratio is already stressed. Their only increased exposure is the additional closing costs, but with the additional payments it will make the mortgage more affordable. The thought is that in the long run it will be less exposure for Fannie Mae and Freddie Mac.
PBN: The program has been available nationwide for the last month. Would you say there is a notable amount of homeowners in the area that are interested?
LEVEILLE: Ironically no, not a lot. We have had some of our members who have loans with us ask about it, but there hasnâ€™t been a lot of activity. Frankly, weâ€™re planning an ad campaign. We believe there are a lot of people we can help serve in the community.
PBN: What are some of the qualifications?
LEVEILLE: You still need to have a good credit rating and job stability, but the high loan to value ratios will no longer prohibit someone. The loan to value must be more than 80 percent and mortgage payments must be current.