Update 1-21-12: Since I wrote this post in November of 2011, there have been many new developments with HARP. Most notably is that very few bank are actually participating right now. While, to my understanding, a couple of the large banks are doing a modified version of the government’s HARP proposal, many others are claiming to wait until the new guidelines are available in the automated underwriting system that we have become so accustomed to. I have heard both March 15 and March 19 as the roll-out dates for the changes in AU, but since that is nearly 2 months away, time will only tell. Until then, the best strategy may be to cross your fingers and hope that the lenders will actually use the government’s proposed standards when underwriting these refinance loans.
HARP is the Home Affordable Refinance Program. If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage. The HARP loan is a new loan and will require a loan application and underwriting process.
On November 15, the government will release the detail of the new HARP refinance program. It is expected that by December 1, lenders will be accepting applications for those hoping to refinance. At the time I am writing this, details are still a little sketchy, but this is what we believe.
First, the borrower can have an unlimited loan to value, so you can be “underwater” in your mortgage. Second, homeowners will be able to refinance into lower interest rate mortgages without the need for private mortgage insurance, high closing costs, and in many cases, a new appraisal. The main factor is that the lenders are looking for borrowers who have good credit scores, as well as solid incomes and some cash reserves.
Because the general concept is to help those who are trying to stay afloat with their high interest rates in a property that is worth less than the current mortgage balance, the lenders will be looking for those who are CURRENT in their payments. The thought is that if you haven’t defaulted with your high payments, chances are you won’t if your payments are hundreds of dollars less.
There are five questions on the HARP checklist that will need to be answered to see if you will qualify. I’ll discuss the first and leave the others for my next post.
Question #1: Is your mortgage currently backed by Fannie Mae or Freddie Mac?
If the answer is YES, you qualify so far. If you are not sure, you can check to see if your home mortgage is backed by either of them by going to the following:
If you find your property listed here, you have crossed the first hurdle. If not, chances are you are not eligible.
Note: This program will be on a first come first served basis for applications. I fully expect to see a lot of activity and it may overwhelm the underwriters and staff. It would not be unheard of to raise the rates to slow down the submissions a little, so be prepared and get in early with a good clean file and all the requested documents needed right away.
Click here to see: HARP 2.0 part II
Scott
Your Indiana mortgage expert specializing in FHA, VA, and USDA Rural Development loans.
