HARP Update 9/14/12:

Good news for homeowners looking to refinance their mortgage with HARP: Fannie Mae and Freddie Mac recently loosened their HARP guidelines in order to allow even more people to qualify for the program.

Formerly, borrowers needed to have their income(s) verified and needed to meet certain debt-to-income (DTI) ratios in order to qualify for HARP. The DTI ratios were largely an imposition of investors rather than Fannie and Freddie. Now, those DTI requirements have been waived in some cases.

As long as your loan was purchased by Fannie or Freddie prior to May 31, 2009, you are current on your mortgage, and have paid on time for the last six months (and eleven of the previous twelve months), you may be able to qualify for HARP without income verification if you can show that you have assets equal to 12 months of mortgage payments (principal, interest, taxes, insurance, and any other fees).

These assets can be in the form of a variety of liquid assets: cash, stocks, bonds, mutual funds, vested retirement accounts, and money market funds.

Furthermore, certain income and asset verifications were reduced to make the loan process easier. For more information on qualifying for HARP contact one of our licensed mortgage professionals today.

Harp Loan

January 4, 2012

1.6 Million Homeowners Could Refinance Through HARP 2.0:

The new version of the Home Affordable Refinance Program could help a lot of underwater homeowners save billions of dollars in interest payments on their home loans, according to Freddie Mac Chief Economist Frank Nothaft. Nothaft commented in Freddie Mac’s November 2011 Economic Outlook:

“HARP is available for certain borrowers with current loan-to-value ratios above 80 percent and whose loan is owned by Freddie Mac or Fannie Mae. From inception (April 2009) through September 2011, more than 900,000 borrowers have obtained a refinance loan through HARP. In addition to an extension of HARP through the end of 2013, the recent announcement included the following enhancements: waiving certain loan seller/servicer reps and warranties for eligible borrowers, reduction or elimination of some fees that had been previously assessed, removal of the maximum current loan-to-value limit, and eliminating the need for a new property appraisal in some cases. Estimates of the number of additional HARP refinances vary, with the Federal Housing Finance Agency stating that “HARP refinances may roughly double or more from their current amount”, Keefe Bruyette & Woods’ analysts estimating about “1 million incremental loans”, and Moody’s Analytics projecting as much as 1.6 million additional loans above what would have occurred under the original HARP terms, bringing the total number of HARP refinances to as much as 2.85 million loans by the end of 2013.”

As well as helping many underwater homeowners, HARP 2.0 could provide a huge boost to mortgage originators. Many originators’ volume is down despite record low rates because many borrowers are precluded from getting a new loan due to being upside down on their mortgage. It is estimated that HARP 2.0 could increase mortgage originations by as much as $200-300 billion between 2012 and 2013.

The average borrower refinancing with HARP could save $2,500 or more in interest payments on their home loan in the first year after refinancing. This could have a substantial stimulative impact on the economy by putting more money in people’s pockets.

Another recent update is that Fannie Mae has made some big changes to their underwriting guidelines that may encourage more lenders to adopt HARP 2.0. Fannie Mae executives eliminated an underwriting guideline that formerly required lenders to determine if a borrower has a “reasonable ability to repay” their loan based upon their debt-to-income ratio, income, and other factors. Now lenders may be able to qualify borrowers based upon credit score and recent payment history. This could streamline the refinancing process, making it easier for many people to refinance their loans.

Most large lenders are still updating their underwriting guidelines for HARP 2.0, so the program is not currently widely available. We anticipate that it will be rolled out in the first quarter of 2012.

On November 15, 2011, Fannie Mae and Freddie Mac released updated guidelines for the newest version of the Home Affordable Refinance Program.  The updates are designed to help as many as one million homeowners refinance at today’s low mortgage rates.

It appears that many lenders are going to participate in the program, although we won’t know for sure until individual investors release their own overlays for this program.

Some of the key features of the program include:

HARP is now extended through the end of 2013.

  • In order to be eligible, loans must have been purchased by Fannie Mae or Freddie Mac after May 31, 2009 and have loan-to-value ratios of at least 80%.
  • The 125% LTV cap on fixed rate mortgages has been eliminated (there is still an LTV cap of 105% on adjustable rate mortgages).
  • To qualify, borrowers must be current on their mortgage for the last six months, and have no more than one late payment over the past year.
  • New appraisals may not be needed to qualify.

As more details of the updated program emerge, we will update this space.

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On October 24, 2011, the Federal Housing Finance Agency (FHFA) announced major changes to the Home Affordable Refinance Program (HARP). These changes will enable even more borrowers to take advantage of this opportunity to refinance at today’s low mortgage rates.  Although Fannie Mae and Freddie Mac have yet to release guidelines for the new program, the largest change is the elimination of the 125 LTV ceiling on HARP loans. This means that it may be possible to refinance regardless of how much negative equity you have.

Among the other changes to the program:

 

  • Some risk-based fees for borrowers refinancing into shorter-term mortgages will be eliminated, and a variety of other fees may be lowered.
  • The current 125 LTV ceiling for fixed-rate mortgages backed by Fannie and Freddie will be eliminated.
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • The need for a new property appraisal could be eliminated where there is a reliable AVM (automated valuation model).
  • HARP will be extended through Dec. 31, 2013 for loans originally sold to the Enterprises on or after May 31, 2009.

Only borrowers with employment who are current on their Freddie Mac- or Fannie Mae-owned mortgages will be able to take advantage of the new HARP.  Borrowers who have previously refinanced with HARP are not eligible.

Edward Demarco, the Acting Director of the FHFA said of the changes to the program:

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach. Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the Enterprises. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets”.

Fannie Mae and Freddie Mac will issue guidance on the HARP updates to lenders and servicers by November 15, 2011. At that time we should have additional clarity on the eligibility requirements for the new version of HARP. It is possible that these changes could take effect as soon as December 2011.

These are the current HARP guidelines.  These will likely change in the coming months with the updated program:

  • Your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
  • You must be current on your mortgage, and cannot have made a payment more than 30 days late in the past year.
  • You must have negative home equity (you owe more on your mortgage than your home is worth), but your mortgage cannot exceed 125% of the value of your home.
  • Refinancing must help the affordability or stability of your mortgage.
  • You must have the ability to continue making payments
  • Mortgage owned or guaranteed by the FHA, VA, or USDA are not eligible for HARP.
  • Your property must be 1-4 units.
  • Your property must also be your primary residence. 2nd homes are not eligible for refinancing under HARP.

 

To find out if your loan is owned by Fannie or Freddie, to discuss the program requirements further or lock in current rates:

  • speak with a mortgage professional now by calling 877-868-2504
  • Chat Live on-line with a mortgage professional