HARP 2 Program Guidelines vs Lender Overlays

by Stephanie in Bronx, by John G. in Albuquerque, by Jeannie in Delray Beach

Ask Kate about HARP 2 program guidelines vs lender overlays: Fannie Mae and Freddie Mac, regulated by Federal Housing Finance Agency (FHFA) sets HARP 2 refinancing guidelines for Making Home Affordable, an official program of the Departments of the Treasury & Housing and Urban Development. Additionally, lenders add their own requirements, known as overlays.


Doesn't it seem fitting that I should inquire how many agencies it takes to refinance a mortgage? Meet 3 homeowners who feel the same.

Question 1: Refinancing NYC Cooperative under HARP 2 Program Guidelines

By Stephanie from Bronx, New York
The brick wall? HARP 2 Program Guidelines vs Lender Overlays

Kate, I am trying to refinance my cooperative (located in NYC) with Bank of America. They participate in the HARP program but they told me the only way I could be eligible for the program is if my refinance is 80% of the value of my appraisal.

I owe $177,000 on my original loan and I believe my co-op is worth only $200,000. So I wouldn't be eligible.

I thought under the HARP 2 program, you could refinance if your LTV is greater than 80%. Can Bank of America not refinance my loan because of this 'amendment' they made to the HARP rules?

***zz-portrait-left.shtml*** Ask Kate answers: Refinancing NYC Cooperative under HARP 2 Program Guidelines

Hi Stephanie,

Yes, you are right. With more than 20% equity, a homeowner is not eligible for HARP 2 program.

But there is no HARP 2 guideline limiting the amount of negative equity.

Here is Freddie Mac on permissible properties eligible for HARP:
'Attached or detached dwelling, Manufactured Home or unit in a condominium project or PUD, or if permitted by the Seller’s Purchase Documents, a Cooperative Unit.'
But it's no secret that banks get squeamish when lending on condos and cooperatives. I suppose, to limit the loan-to-value to 80% (and not a penny under or over) might be a tricky way for them to avoid lending altogether to cooperatives.

Here's the bottom line. Because Fannie Mae and Freddie Mac do not lend the money, the banks are free to overlay the HARP 2 guidelines with their own brand of paranoia.

So until we've convinced our elected officials that homeowners with underwater financing are not receiving sufficient help, the shenanigans of HARP 2 program guidelines vs lender overlays will be allowed to continue.

Go to New HARP 3 Refinance Program Proposal for the most recent mortgage news on underwater refinancing. You'll discover a simple but powerful way to pass on your wishes directly to the White House regarding the HARP program.

Best wishes for your coop,

PS Don't give up after trying one bank. As I told Kelly, ask other homeowners in your cooperative which lenders successfully closed their recent HARP 2 loans.

Question 2: HARP 2 Refinance after HAMP Loan Modification

By John G. from Albuquerque, NM

Kate, We qualified for a HAMP modification to our loan in October 2010. In trying to qualify for the HARP program we were told by CitiMortgage that we had to wait 3 years after the HAMP modification before we could apply for HARP. Is this a true statement?

***zz-portrait-left.shtml*** Ask Kate answers: HARP Refinance after HAMP Loan Modification

Hi John,

Fannie Mae states in their HARP FAQs that getting a HAMP loan, in and of itself, does not prevent refinancing with HARP.

However, as with all applicants, after reviewing the mortgage payment history and required borrower-benefit, the lender must be satisfied that the hardship supporting the past modification has been resolved.

Go back to the lender and ask for a re-consideration based on this information. However, first put together an iron clad package of documentation verifying that the original hardship is far behind you and what steps you've taken, should another hardship occur, to avoid defaulting on your mortgage.

An example would be bank statements showing 6 months of housing payment reserves in your checking or savings account.

Go here to Increase the Chance of Refinancing Without the Customary Glitch.

Best wishes in your refinance,


Question 3: HARP 2 Lenders in Florida with NO Overlays

By Jeannie from Delray Beach, Florida

Hi Kate, So glad to have found you online.
HARP 2 Refinance and No-Income Verification Guidelines

Been very frustrated trying to find a lender that will write the Harp 2 with no income verification and will use the newly additional guidelines of showing 12 months of PITI in reserves in the bank.

I work, but only very very part time, due to an injury with my back.

Are you licensed in Florida to do HARP 2 loans or do you know of any lenders that will not OVERLAY their requirements and follow the Fannie May Harp 2 guidelines?

Thank you, Jeannie

***zz-portrait-left.shtml*** Ask Kate answers: HARP 2 Lenders in Florida with NO Overlays

Hi Jeannie,

I appreciate your confidence in me however I brought my mortgage origination days to a close in 2006. You can read my story here!

Since 2007 when I created Get Your Best Mortgage Rate, I've kept busy as the author of Ask Kate delivering objective and independent lending information. You'd be correct if you said I'm on a mission to empower homeowners!

As you've discovered, when the lenders add their own particular brand of requirements to Fannie Mae and Freddie Mac guidelines, it creates inconsistency and uncertainty in the market place for homeowners with underwater financing.

Because it's impossible for me to accurately track the overlays of lenders across the nation, my advice is to shop until you find one who does not panic over no-income verification requests.

But before you launch your shopping expedition, become an expert on Fannie's and Freddie's intentions for lenders to help borrowers at...

1. HARP 2 Refinance Embraces No-Income Documentation Guidelines
2. Harp 2 No-Income Verifier Refinance Opens Doors

Would you like to read about other lender shenanigans? Go to Home Loan Help: How to Refinance a Mortgage when You Smell a Rat.

Best wishes for a successful no-income verification approval,


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Is My Mortgage Company Using Overlays to Get a Higher Interest Rate From Me?
by: Abreillia

Kate thanks for all information. Going thru a lender at present with overlays. Their internal rules, guidelines. This loan officer took my application the very top of September 2015. I was approved, he states, for Harp 2.0 program. On October 6.

This loan officer stated to me that I had to remove my fraud credit alert from my credit report. If not he have to cancel my loan then reapply.

Why did this idiot wait a month to advise me of this? Should he have explain this in the begin of the loan process? Why did he call back in a month to say this?

Did this company want me to start over, then the interest rate could be higher?

This company is my loan service that I pay my mortgage payment to. They already have my files. I am waiting for this loan officer to return my call today to ask more questions. If not what I hear I will choose another lender. Unbelievable!

Hi Abreillia, Kate here.

I wish I knew why loan originators act like this. The good news is that, in most cases, HARP does not limit borrowers to their current lenders. There are many participating lenders to choose from.

Before you start shopping for another lender, I think you'll want to read Lee's comment that I posted yesterday. Go to Verbal Mortgage Rate Lock Agreements Are Worthless and scroll down to the bottom of the page to Lee's comment and my answer!

Hopefully, your current lender wises up and gets your HARP refi closed satisfactorily. If not, feel free to write ask questions.

Best wishes, Kate

Overlays and No Income Verification Lender Participation
by: John

I see the articles about no income verification in HARP, but I have yet to find one lender who does this, including the 12 month provision of reserves. The problem is lender overlays, so it makes this offer by Fannie Mae ridiculous when no one offers it. It is not your fault, but I wanted to make this point.
Have a great day,
Best Wishes, John

Hi John, Kate here...

I'm sorry to hear of the lack of lender participation. Please write your reps in Congress about the infuriating overlays, the lack of HARP 3 progress, the absence of lender participation in HARP's no income verification feature.

I offer tips to make the letter writing process less painful at Responsible Homeowner Refinancing Act of 2013.

I appreciate your point, Kate

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You can also ask Kate about your mortgage at How to Find Your Mortgage Lender.

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