I am in Arizona and considering buying and bailing once the market starts to improve. I heard the news yesterday about the extension of HARP to underwater homeowners (I am ~150% LTV, owned by Freddie Mac and serviced by BofA). I might be interested in pursing a refinance since my mortgage is at 5.75% fixed, and I might get interest down to 4% from what I've heard.
But before I even pursue HARP, I want to know if it is legally a refinance program; i.e. the original loan is paid off and a new pone replaces it. From my understanding of AZ law, this would turn my current non-recourse loan into a recourse loan, for which the bank could pursue a deficiency judgement.
Basically I want to take advantage of lowering payments while reserving my future right to walk away unscathed.