Will the third time be the charm for HARP helping homeowners refinance?

Will the third try be a charm for HARP? Industry analysts seem to think so. And so does the government.

The first version of the Home Affordable Program failed to help homeowners who were underwater.

The revised version, HARP 2.0, helped some borrowers. But there's no way it will help the millions of homeowners eligible for the program.

So what do we need? HARP 3.0.

That's in short what housing experts told the Senate Banking Committee Thursday during a hearing on a bill designed to help borrowers refinance their mortgages.

The bill, called the Responsible Refinancing Act of 2012, would remove additional barriers that still prevent underwater borrowers from refinancing and reducing the interest rate on their mortgages.

"HARP 2 still is not designed to help enough underwater homeowners," Quicken Loans CEO Bill Emerson said during the hearing, according to a written testimony. "The current proposed legislation would enable every loan originator in the country the opportunity to help the 4 million HARP eligible borrowers."

Why?

Simply put, because this measure would eliminate the risk of lawsuits for lenders that refinance an underwater mortgage.

HARP 2.0 eliminated that risk for lenders that refinance mortgages they already service. But not for lenders that refinance a mortgage serviced by another bank.

In other words, if your mortgage is serviced by one of the large banks participating in HARP, you shouldn't have a problem refinancing because that lender has been given the guarantee that it will not be sued for giving you that refinance, even if you end up defaulting later.

But if your bank doesn't want to do HARP, you may have trouble refinancing. There are exceptions.

Some lenders are taking the risk and refinancing mortgages through HARP 2.0. But most won't refinance a loan through HARP if it's serviced by another lender.

A mortgage servicer is not required to verify the borrower's income or assets when refinancing a loan through HARP 2.0 if the servicer already services that loan, Emerson explained to the committee.

"The same servicer only needs to verify that the borrower has a viable source of income," he said.

But the new lender must verify everything. And if it makes even a minor error, that lender could be forced to buy that loan back in the future. That notion deters most lenders.

Mark Zandi, chief economist for Moody's Analytics told the committee that these HARP changes and other measures in the bill would help millions of borrowers.

The bill would eliminate up-front fees and appraisal costs related to refinancing a HARP loan.

If the legislation is implemented by the fourth quarter of this year and mortgage rates remain near 4 percent through the end of 2013, more than 4 million borrowers would be able to refinance their loans, Zandi said.

What do you think? Will HARP 3 be approved? Will it help?

What do I think? I don't understand why it wasn't done right the first time and I'm not so sure this bill will pass. But I'm for anything that helps borrowers.