Home Affordability Refinance Program
Posted December 7, 2011
A few weeks ago the New York Times had an article about the most
recent expansion of the Treasury’s Home Affordable Refinance Program, known
as HARP, which allows underwater homeowners with Fannie Mae and Freddie Mac
backed loans to refinance their mortgage and take advantage of today’s low
interest rates.
The revised program lifts the Loan To Value limit on fixed-rate loans which
was 125% to unlimited, reduces some refinance fees, allows refinances of
loans that experienced minor delinquency, and extends the eligibility date.
So far, HARP has helped 838,441 homeowners nationwide. Treasury anticipates
this program will help an additional 900,000 homeowners in the coming year.
To better understand the program and who may be eligible, Doug Mendenhall from Alpine Mortgage answers several questions:
Q: How does a person find out if Fannie or Freddie owns their mortgage?
A: Go to the Fannie <http://www.ne16.com/t/
and Freddie <http://www.ne16.com/t/
lookup websites
Q: If Fannie owns my loan, will it go back to Fannie?
A: Yes, the loans go “Fannie to Fannie” and “Freddie to Freddie.”
Q: Who benefits most from HARP?
A: Homeowners with solid income, credit, employment, and mortgage payment
history, who lost equity during this housing downturn. People who are in
professions where they need to maintain their credit rating to keep their
jobs will benefit the most. For Example, police officers, financial
professionals, attorneys, military officers, civil servants, etc.
Q: What if my loan was originated in April 2010? Can I still qualify for
the HARP refinance?
A: As of now, HARP is limited to mortgages delivered to Fannie and Freddie
prior to June 1, 2009. When the expanded guidelines take effect in March
2012, you may qualify.
Q: If I’m over 80% LTV, will I have mortgage insurance on my new loan?
A: That depends on if you had mortgage insurance on your existing loan. If
you don’t currently have MI, you won’t have it on your new loan. If you do
have MI, you will have it on your new loan, and most likely with the same MI
company as you had before.
Q: Will my loan servicer change?
A: Maybe, maybe not. It all depends on where the loan and its servicing
rights are sold or assigned in the secondary markets.
Q: Can I refinance my underwater rental property?
A: Yes.
Q: Can I refinance my underwater vacation home?
A: Yes.
Q: What is the maximum loan limit?
A: $417,000.
Q: What if I have a second mortgage?
A: Seconds may re-subordinate their position and allow you to refinance
your first mortgage.
Q: When does the unlimited LTV program take effect?
A: The earliest this program will be online looks to be March 2012.
Remember, Fannie and Freddie’s software programmers have to re-write all the
software code for the new guidelines. Most mortgage originators use the
automated underwriting engines of Fannie and Freddie rather than manually
underwrite loans.
Q: Do people really qualify for these loans?
A: Yes. So far 838,441 people have refinanced with HARP so far. HARP 1.0
and HARP 2.0 are aimed at the homeowner who bought at the peak of 2004-2007,
who put 10-20% down at the time of purchase. They have stable jobs, income,
“strong to quite strong” credit, and have a desire to stay in their home.
Q: Do you have an example of a HARP loan?
A: Yes, here’s a loan I’m closing right now. The loan balance is $300,000
and the home appraised at $280,000. It’s a 108% LTV, Freddie to Freddie
refinance.
| Current Loan (3/2008)$300,000 6.50% $1896/mo PI |
New Loan (12/2011) $303,0004.25% $1500/mo PI
|
No debt besides mortgage
780 Fico
96k in gross income
Q: Does this program help the people who lost their job and fell 180 days
delinquent on their mortgages?
A: No. That would most likely be the HAMP modification.
Q: What if I have a permanent HAMP modification, can I apply for HARP?
A: Yes, you can apply for HARP.
Q: Do I have to pay closing costs out of pocket?
A: No, you can roll your closing costs into the new loan; however, you are
limited to the lesser of $5,000 or 4% of the loan amount.
Q: Can I get cash out to pay off debt?
A: No. This program is for rate and term refinances with a maximum of $250
back at closing.
Q: What if I’m delinquent on my property taxes?
A: Taxes take priority over voluntary liens like mortgages and will need
to be brought current. Depending on your credit scores, debt to income and
loan to value ratios, you may be able to roll your taxes into your new loan.
Doug Mendenhall
Author/Investor/Mortgage Banker
Alpine Mortgage
NMLS #205740
Equal Housing Lender
Cell 503-317-9435 | Fax 503-496-5743
OR, CA NMLS 81395; WA CL-81395
Clackamas Branch
Author
