Last year to use HARP

As posted on The Mortgage Blog in late 2014, interest rates are still around their lowest levels from 2014. That’s great news for home owners who are upside-down on their loans.

The Home Affordable Refinance Program, or HARP, is entering its final year (well, unless Congress extends the program again). HARP allows homeowners who are underwater to refinance into a lower rate. Combine a loan program for underwater homeowners with low rates, and it is a win for homeowners. How do you qualify for HARP?

If the home was purchased and securitized by Fannie Mae or Freddie Mac before June 1, 2009, AND the monthly mortgage payments have been paid on time for the past 12 months, you probably qualify for HARP. It doesn’t matter if you have a second mortgage or pay monthly mortgage insurance on your loan, you could still qualify for HARP.

You might be thinking… “I’m really underwater. I can’t qualify.” Just know homeowners can be way, WAY underwater. There is no limit.

Also, homeowners who did not have private mortgage insurance (known as PMI) on their loan initially can still refinance even without 20% equity in their home today. There would not be PMI on their new loan.

If you missed the historically low rates of 2012 and 2013, you may want to act quickly.  Rates are unlikely to return to those historic low levels, and they at the just about the lowest levels seen since May 2013.

To get started, contact me to talk about the pros and cons of HARP. Together, we can determine if you qualify for the HARP program.   It’s the best way to lower monthly payments when you owe more than your home is worth.  Don’t miss this opportunity!

HARP 3? Maybe!

When HARP was created by the government to refinance homes that were underwater, the goal was for seven million homeowners to use the program. Due to the guidelines, HARP got off to a slow start. Roughly two years after the program began, less than one million homeowners were able to take advantage of it. This caused the government to rework the guidelines, and HARP 2 was born.

By November 2012, HARP 2 was in full swing and the pace of refinancing tripled. Even still, the total number of homeowners able to use HARP is well below the goal of seven million. To help reach the goal, HARP 3 is being proposed. To be clear, nothing has passed Congress. That means HARP 3 doesn’t yet exist, but it is gaining traction.

Here are some of the potential changes to come with HARP 3:

1. Expand HARP to include all loans and not just those owned by Fannie Mae and Freddie Mac. This would include subprime, Alt-A, stated income/asset, and no doc loans.
2. Eliminate the cutoff date of May 31, 2009 and allow all qualifying homeowners to use HARP.
3. Allow homeowners to take advantage of HARP more than once. Homeowners who used HARP when it first came out got a rate in the mid to upper 4’s. As we all know, interest rates dropped into the 3’s, but homeowners who had already used HARP couldn’t take advantage of these historically low rates.
4. Allow high balance loans to use HARP.

As I said, nothing is imminent as the proposed changes have not been approved by Congress. We at least know some of the proposed changes. Once there are concrete details on HARP 3, The Mortgage Blog will certainly let you know.

HARP 2.0 review

HARP 2.0 kicked into full gear during the spring. The revamped program has been around for roughly 5 months now. It is time to look back and see if it is working as it was originally advertised. Some of the changes included homeowners being able to refinance with any lender regardless of if they have PMI, a second mortgage, or if they are really, REALLY underwater on their mortgage.

Let’s look at each of those from my own client’s experiences and what has been commonly found true in the industry:

#1. Homeowners can refinance even if they are underwater on their mortgage and still not pay PMI if they do not currently pay PMI.

This is working out as planned. If a homeowner does not have PMI on their loan and qualify for HARP, then the refinance can take place and no PMI will be required for the new loan.

#2. Homeowners can refinance even if they DO have PMI on their current loan.

This is mostly true. Almost all of the PMI companies to allow for transfers of the current mortgage insurance policy to the new loan. Your loan officer will be able to determine who has your PMI and if they allow for PMI transfers.

#3. A homeowner can refinance even if they have a second mortgage.

This is probably mostly true as HARP 2 allows unlimited total loan to value. Since HARP 2 began, I have not had a subordination request denied by a second mortgage company. This isn’t to say NO ONE has had one denied. I’m sure someone, somewhere has still had a subordination request denied. From my experience, HARP 2 is working as advertised in this regard.

#4. A homeowner can refinance even if they are REALLY underwater on their mortgage.

Depending on what you read, this can be true or untrue. There have been reports of some homeowners still being denied, but there are now no limits on the loan to value. Homeowners that were previously denied for being too far underwater are able to refinance.

#5. A homeowner can refinance with any lender using HARP 2.0.

This one seems to be mostly no if the loan to values exceed 125%. If the loan to value is at or below 125%, then yes, in most cases many banks and mortgage brokers can do the refinance. However, when the loan to value moves over 125%, then fewer banks and brokers can actually do the refinance. For some reason, 125% seems to be the cutoff for the “any lender” aspect of HARP 2. If a homeowner falls into this category, then their current loan servicer is probably their only option.

For my own mortgage, I was in this same situation. My loan to value sits over the 125% level, and I was unable to do the HARP 2 refinance through the company I work for. I had to use my current loan servicer. The good news is, I was able to refinance my mortgage to a rate of 4.250%. The only downside was the interest rate. My rate was roughly 0.500% higher than the rate I could have got somewhere else. I didn’t have a choice as I needed the unlimited loan to value. A rate of 4.250% was better than not refinancing at all.

The moral of the story – HARP 2 has mostly accomplished what it set out to do. The only caveat being if one needs an unlimited loan to value refinance. Under that scenario, the options mostly seem to be limited to one’s current loan servicer.

How should a homeowner proceed? I would contact a loan officer with your preferred lender first. They should be able to review your situation and see what you might qualify for with HARP 2. If you do need an unlimited loan to value and your current loan servicer, then you can call and see what they can offer. The advantage of contacting your preferred lender first is you’ll know your options and the going interest rates that are available. That could help when negotiating with your servicer if they are you only option.

Whether it is your primary residence, a second home, or an investment property… if the home is located in the state of Georgia, I can help. Contact me today, and we can evaluate what you qualify for with HARP 2.

Accidental Landlord and HARP

“Accidental Landlord” is the term being thrown around to describe the scenario when a homeowner bought a new primary residence but was unable to sell their current primary residence. When this occurs, the former home they still own is converted into an investment property. Would these homes be eligible for HARP?

The short answer is – yes. If the homeowner qualifies for HARP (the major qualifying points of HARP include Fannie/Freddie holding the loan, got the loan prior to March 1, 2009, and current on the payments), then there is a good chance they can use HARP on this property.

What are some of the details a homeowner needs to know:

• The max loan to value (known as LTV) may not be unlimited when HARP 2 fully kicks in later this spring. The unlimited LTVs may only be for owner occupied homes and not investment properties. The max LTV on the “accidental landlord” properties may be limited to something like 125% or 105%. We won’t know for sure until HARP 2 is fully rolled out.
• While they are similar, Fannie Mae and Freddie Mac may handle this scenario differently from one another. First, find out who owns your mortgage. You can do this by using their online look up tools. To check Fannie Mae, use this link. For Freddie Mac, go here. Then we’ll need to check the individual guidelines for Fannie Mae and Freddie Mac to see how each handle the “accidental landlord” scenario.
• You also need to let your loan officer know if you pay private mortgage insurance (PMI), have Lender-Paid PMI (LPMI), have a second mortgage, or if the property is a condo. Any of these can change the course of how the loan is processed.

There are some hurdles to jump through if a homeowner became an “accidental landlord.” That said, there is the possibility of using HARP even if you converted your former residence to an investment property because you couldn’t sell it. If this describes your situation, and the property is in Georgia, contact me and we can explore the possibility of using HARP to refinance that property.

Political Rhetoric

Over the past several weeks we’ve heard political candidates talk about various plans to help the housing industry. What are these plans and how will they impact the housing industry?

The two ideas that are being discussed the most out there include partial debt forgiveness for mortgages that are underwater AND helping homeowners refinance.

How are these going to impact the housing industry? Probably not much as they may never see the light of day. Right now this is all talk. For something to go into effect, it has to be approved by the House and Senate. Then the President has to sign off on the proposal. Since this is an election year, it is doubtful that either side will be eager to work with their opponents in 2012. Expect stagnation (not innovation) out of DC this year through the election.

If any of these talks do signify something substantial, you know The Mortgage Blog will be all over it!

Instead of waiting for news out of DC, take a look around the current state of the market:

• if you are thinking of buying a home, it is still a buyer’s market and rates are ridiculously low. Now is the time to get out there and take advantage of it. I can help you get started with the prequalification process.
• if you own a home and are underwater, contact me to see if you qualify for HARP. This is a government sponsored refinance program helping responsible homeowners refinance even if they are underwater. To know more, contact me or read some of my previous posts found here and here.

If the home you are looking to buy or refinance is in the state of Georgia, I can help you get started.

Don’t get caught up in the talk going back-and-forth over the next several months. You might just miss out on the great opportunities already at hand.

HARP 2 Inquiries

The announcement of HARP being revamped took place about three months ago (for more on HARP, scroll down to read previous posts from this blog). Since the announcement, I’ve spoken with at least one or two people per day about the program and how it might help them. Most of the homeowners I’ve spoken to need the unlimited loan to value portion of the changes to begin. That is scheduled to start in the spring, so we are waiting to begin the refinance process.

In the meantime, I have put together a list of clients with their mortgage needs in relation to HARP. After a 5-10 minute conversation, I have categorized clients by whether their loan is owned by Fannie Mae or Freddie Mac, if they have PMI, and if there is a second mortgage on the property. Once the unlimited portion becomes available, I can quickly contact each person and start the refinance process.

If you’d like to know about HARP, own a property in the state of Georgia, and have about 5 minutes, reach out to me by phone or email. We can begin the conversation and see whether we should move forward now OR wait until the unlimited loan to value portion of HARP is available. If that is the case, I’ll add you to the list and contact you as soon as unlimited loan to values are available.

If you are a homeowner and would like to refinance using HARP, this is a call you need to make to see if you qualify and how to move forward. Planning is key here because when unlimited loan to values start, it is going to be a day-after-Thanksgiving-get-into-Wal-Mart rush to underwriting.

Getting a headstart on this rush would be ideal.

HARP and mortgage insurance

When HARP first rolled out a couple of years ago, homeowners with private mortgage insurance would not qualify for the program. Some changes were made along the way that allowed private mortgage insurance (known as “PMI”) to be transferred to the new loan originated through HARP.

But not all PMI loans are created equal. What about homeowners who went with Lender Paid Mortgage Insurance instead of a borrower (monthly) paid PMI?

It actually depends on the company providing the mortgage insurance coverage. Some mortgage insurance companies are reviewing files and considering transferring the coverage to the new HARP loan. Other mortgage insurance companies are not transferring their mortgage insurance policies at all regardless of the type (borrower paid versus lender paid).

It is helpful to know who provides your mortgage insurance. You can find this out by looking in a couple of places. First, try your monthly mortgage statement. If nothing is mentioned there, try your HUD-1 (settlement statement) you got at closing. Last resort, pull out that LARGE stack of papers the attorney gave you from closing. One of the documents you signed would have been a mortgage insurance disclosure. That may also tell you who is providing your private mortgage insurance.

Again, there is no guarantee the mortgage insurance can be transferred. Knowing who is providing the coverage would allow me to see if any of the lenders I work with would be able to get the PMI transferred to your new HARP loan. Regardless if it is borrower or lender paid mortgage insurance, there may be a source.

UPDATE as of 12/20/2011 – Over the past week, several of the lenders I work with have said they cannot refinance a loan using HARP if it has LPMI. For now, it seems that if your loan has monthly paid PMI, we can look to transfer it to the new loan. If it has LPMI, the potential refinance using HARP is on hold.

HARP 2 is here!

Do I have your attention?… Good! The highly anticipated release and implementation of HARP 2 has arrived. For background on HARP (the Homes Affordable Refinance Program), check out my previous posts. There is a detailed “question and answer” style post here. Also, this post details the changes now allowed by Fannie Mae and Freddie Mac.

Some of my lenders have (finally!) released their guidelines and are accepting loan applications for the revamped HARP. While the guidelines individual lenders use can vary from Fannie Mae or Freddie Mac guidelines, from what I’ve seen so far, they seem to mirror one another.

Here are some specific details for using the updated HARP program:

• allows up to 125% loan to value (LTV) for owners primary residence and second homes (was 105%). The unlimited LTV program will not start until 2012.
• investment properties can be refinanced up to 90% LTV (was 80%). To use HARP on an investment property, the property must have originally been purchased as an investment property (not converted from a primary residence to an investment property).
• debt to income ratio can be as high as 55% (was 45%)
• unlimited total loan to value for homes with second mortgages. That said, the second mortgage company must subordinate their loan behind the new first mortgage to qualify
• The “old” rules of requiring Fannie/Freddie to own your loan, you got the mortgage prior to early 2009, and being current on the payment still apply in order to qualify.

These are exciting developments that homeowners can now use and refinance into much lower interest rates. If the property is in Georgia, and you think you might qualify to use HARP, contact me and we’ll find out!

Coming Soon: “HARP 2 – The Mulligan”*

• “one of the most anticipated sequels of 2011” – says Clay Jeffreys of The Mortgage Blog
• “it’s about time” – says a frustrated homeowner

* Note the program is still called “HARP,” but I’m referring to it as “HARP 2” for comedic relief and clarity’s sake

Unlike some movie sequels that get filmed (really, we needed a Spy Kids 4?!?), the Homes Affordable Refinance Program, known as HARP, needed a sequel. Why? Just like Rebook realized they needed to make more “office linebacker” commercials after its popularity from a past Superbowl, HARP needed some revisions to be more readily available to homeowners so more people can enjoy it!

Reebok knew what they were doing!

The original intent of HARP was to allow borrowers who were somewhat underwater refinance their mortgage into a lower rate. On paper, it sounded great. Sadly, unforeseen issues arose that didn’t allow the program to be as effective as the government hoped it would be.

What changes should one expect with the sequel “HARP 2 – The Mulligan”? There are a few major changes, but good portions of the HARP program remain the same. You can read about the program from my recent posts here (a recent “question and answer” session) and here (an overview when the program was first announced). Changes include:

• No maximum loan to value limit. Once this part begins (to start in 2012), homeowners can be 200 or 300% underwater and still refinance to a loan without paying mortgage insurance if there is not mortgage insurance on the current loan.
• Up to 125% loan to value ratio to be allowed with any mortgage company. This should get underway starting in December. Presently only your current mortgage servicer was allowed to go that high, which limited consumer’s ability to shop for the best interest rate.
• Homeowners can qualify even if they are currently unemployed AND no income verification is required if the previous loan was a stated income loan as long as…
• Homeowners have no late mortgage payments in the last 6 months, and only one late mortgage payment of 30 days in the last 7-12 months. In other words, if you are paying on time, you could refinance without income verification.
• Private Mortgage Insurance (PMI) to be transferred to the new loan as long as it is not Lender-Paid PMI

As long as Fannie Mae or Freddie Mac own your mortgage, you got the mortgage prior to the end of February 2009, and you are current with the payments, there is a good chance you’ll qualify for new and improved HARP 2 loan program.

Some questions you may be thinking:

• How do I know if Fannie Mae or Freddie Mac own my mortgage? Great question! You can use their online lookup tools. Use this link for Fannie Mae. Try this link for Freddie Mac.
• How do I get started? If the property (primary residence, vacation home or investment property) is in the state of Georgia, I can help you get started. Contact me and we will take it from there.

Remember HARP 2 is not here yet, but it is coming soon. Refinance applications for the updated program can start in December, but some parts may not be available until 2012. Stay tuned to The Mortgage Blog for updates on all aspects HARP 2 availability in the coming weeks!