Caruso-Cabrera: How I Qualified for a MHA Refi


Mine is a story of government intervention gone wrong, of well-meaning intentions unfulfilled.

You see, I qualified for President Obama's Making Home Affordable Program. You should find that absurd.

A few months back interest rates were at record lows and I decided to refinance my fixed rate mortgage. I called Bank of America , my loan servicer, and after a couple of questions the nice guy who answered the phone told me I qualified for the new government program.

"That can't be possible," I said. "That program is for people in dire straits. It is meant to help people in trouble. I'm just trying to do a basic refi."

He told me that yes, I absolutely qualified and directed me to the program's Web site.

To get an MHA refi I had to be:

1. Employed

2. Current on my mortgage

3. In a loan currently owned by Fannie Mae or Freddie Mac

4. In a loan that didn't exceed 105 percent of the value of my home

Money & Politics With Larry Kudlow:

If I went with the program what did I get? Speed. The bank did no income verification and no appraisal. Instead the nice man on the phone just typed my address into a government database that told him the approximate value of my home.

The refi was done in a lightning-quick three weeks.

I comparison shop and I got the same rate that everyone else was offering: 4.8 percent down from my then-rate of 6.7 percent.

Closing costs appeared to be the same regardless of the company.

More on Housing and the Economy:

  • Special Report: The State of Housing in America

To its credit, the White House has acknowledged the program isn't working. That's because the worst of the subprime mortgages are on homes that have fallen so far in value that a loan-to-value ratio of 105 percent or even the more generous level of 125 percent is a pipe dream.

Here's the bottom line: This was supposed to be helping people in need.

When banks or politicians start bragging about "all the people who have been kept in their homes," be suspicious.