There has been a lot of hub-bub recently about the revisions to HARP. Â This is a guest post that I thought answered a lot of the questions you might have!
by Ted Spradlin,Â Mortgage Advisor, MLO #214130
firstname.lastname@example.orgÂ Â Â Â Â Â Â Â Â www.alpinemc.com
Yesterdayâ€™sÂ New York Times had an articleÂ about the most recent expansion of the Treasuryâ€™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 todayâ€™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, I created several Questions and Answers:
Q:Â How does a person find out if Fannie or Freddie owns their mortgage?
Q:Â If Fannie owns my loan, will it go back to Fannie?
A:Â Yes, the loans go â€œFannie to Fannieâ€ and â€œFreddie to Freddie.â€
Q:Â Who benefits most from HARP?
A:Â 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.Â For Example, police officers, financial professionals, attorneys, military officers, civil servants, etc.
Q:Â What if my loan was originated in April 2010?Â Can I still qualify for the HARP refinance?
A:Â 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:Â If Iâ€™m over 80% LTV, will I have mortgage insurance on my new loan?
A:Â That depends on if you had mortgage insurance on your existing loan.Â If you donâ€™t currently have MI, you wonâ€™t have it on your new loan.Â 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:Â Will my loan servicer change?
A:Â Maybe, maybe not.Â It all depends on where the loan and its servicing rights are sold or assigned in the secondary markets.
Q:Â Can I refinance my underwater rental property? Â
Q:Â Can I refinance my underwater vacation home?
Q:Â What is the maximum loan limit?
Q:Â What if I have a second mortgage? Â
A:Â Seconds may re-subordinate their position and allow you to refinance your first mortgage.
Q:Â When does the unlimited LTV program take effect?
A:Â The earliest this program will be online looks to be March 2012.Â Remember, Fannie and Freddieâ€™s software programmers have to re-write all the software code for the new guidelines.Â Most mortgage originators use the automated underwriting engines of Fannie and Freddie rather than manually underwrite loans.
Q:Â Do people really qualify for these loans? Â
A:Â Yes.Â So far 838,441 people have refinanced with HARP so far.Â 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.Â They have stable jobs, income,â€œstrong to quite strongâ€Â credit, and have a desire to stay in their home.
Q:Â Â Do you have an example of a HARP loan?
A:Â Â Yes, hereâ€™s a loan Iâ€™m closing right now.Â The loan balance is $300,000 and the home appraised at $280,000.Â Itâ€™s a 108% LTV, Freddie to Freddie refinance.
Current Loan (3/2008)
New Loan (12/2011)
$95,000/yr gross income
$1896/mo PI Â
No debt besides mortgage
Q:Â Does this program help the people who lost their job and fell 180 days delinquent on their mortgages?
A:Â No.Â That would most likely be the HAMP modification.
Q:Â What if I have a permanent HAMP modification, can I apply for HARP? Â
A:Â Yes, you can apply for HARP.
Q:Â Do I have to pay closing costs out of pocket?
A:Â 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:Â Can I get cash out to pay off debt?
A:Â No.Â This program is for rate and term refinances with a maximum of $250 back at closing.
Q:Â What if Iâ€™m delinquent on my property taxes?
A:Â Â Taxes take priority over voluntary liens like mortgages and will need to be brought current.Â 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.