Getting HARP 2 Mortgage Loan Approval

by Homeowner in Chicago

Ask Kate about getting HARP 2.0 mortgage loan approval: Hi Kate, Maybe you can give me a straight answer. I should qualify under every criteria of Freddie Mac. My mortgage broker said "No problem." He ran me through Freddie Mac's system, and I was denied by them. He said a "Caution" was put on the loan, he couldn't get a reason why.



"Homeowner in Chicago" continues... Freddie Mac's customer service tells me there's no such thing. He said they're lying. So, I should qualify, but I can't get a reason as to why I do not.

I have a 5 year old condo. I am underwater about 120%. I have never been late on my mortgage (or anything else), am at 7.25%, with a credit score over 730. I have a debt-to-income ratio just less than 45%. I have a lot of money in my 401k.

But I do not have a current mortgage company, just a servicer. My original mortgage company, Taylor, Bean & Whitaker was shut down by the feds over 2 years ago. My mortgage broker told me he hasn't seen one loan go through with LTV over 105% that wasn't with the same lender.

So, now what? This whole thing seems like a scam and I'm ready to hand in the keys. The stress from this has already damaged my health. Is there no one to help?

Kate Answers: Getting HARP 2 Mortgage Loan Approval

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear "Homeowner in Chicago",

I'll give you the straightest answer I have.

Although I can't read the mind of your lender (or Freddie's for that matter), I agree with Freddie Mac's statement.

It's certainly does not speak to the quality of a mortgage originator who can't or won't tell a borrower why they are denied. Even more so, it is against law.

HARP 2.0 Mortgage Loan Approval Disclosure? It's the Law!

The Fair Credit Reporting Act of 1971 requires lenders to provide borrowers with the same information they use to make a decision, either mortgage loan approval or denial.

The Equal Credit Opportunity Act of 1974 prohibits housing discrimination due to race, color, religion, disability, gender, or national origin. ECOA establishes guidelines for evaluating credit information and requires written notification upon credit denial.

It's not a complimentary gesture to let a mortgage borrower know why they were denied. It's the law!

What is a Freddie Mac "Caution" Risk Class?

If your loan receives an automated underwriting risk class of "Caution", Freddie Mac may require your loan to be switched to manual underwriting.

Since only the loan servicer is authorized to manually underwrite a mortgage according to HARP 2.0 guidelines, a borrower would bid their broker farewell and contact their lender or loan servicer to proceed.

Ask if this applies to your transaction since there is more than one "Caution" risk class.

Now WHY would a loan receive a "Caution"? Well, your mortgage broker received the facts of your loan submission in writing and if you were denied based on them, you have every right to know why. It's the law!

By the way, Freddie Mac's proprietary underwriting software for HARP 2.0 is Relief Refinance Mortgages – Open Access.

Giving HARP 2.0 Mortgage Loan Approval One More Try

Now assuming your loan did receive the "Caution" risk class that restricts you from shopping for your own lender, I hope you'll try applying for HARP 2.0 with your loan servicer.

And feel free to ask more questions by commenting on this page. That would make asking another question very simple.

You may also be interested to know that you can contact the Illinois Department of Financial & Professional Regulation, Division of Banking, Consumer Services Unit at 800-532-8785.

In addition, follow this link to Ask Kate Why HARP 2 Mortgage Lenders Are So Inconsistent for more helpful information.

Help for Homeowners Local Community Event in Chicago, Illinois

The Chicago, IL event has concluded now but Making Home Affordable is hosting more across the nation. Check back often at my mortgage blog for details and the blue box on my home page for a schedule of upcoming Making Home Affordable events.

On Monday, April 23, 2012 from 1:00 pm to 8:00 pm, Making Home Affordable comes to Chicago, Illinois.

Donald E. Stephens Convention Center – Hall G
5555 North River Road
Rosemont, Illinois 60018

There is complimentary parking in the Convention Center Garage. The help is free.

Although centered around HAMP foreclosure prevention, you can call a HUD counselor at 1-888-995-HOPE (4673) to ask if your loan servicer will be represented there.

If the HUD counselor thinks attending the community event put on by Making Home Affordable will be beneficial to you, the counselor will also help you with putting together a list of required documents.

Paperwork for Making Home Affordable Local Community Events

Make the most of local foreclosure prevention help!

Before attending a local Making Home Affordable Community Event to meet with your loan servicer representive and a HUD counselor, find out what you need to bring at List of Required Paperwork.

Good luck and best wishes refinancing,

Ask Kate

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