HARP 2 Refinance Plan Fails Underwater Mortgages

by Scott from Boston

Ask Kate why HARP 2 refinance plan fails underwater mortgages: Kate are you for real? Why aren't you advocating for us? Where is the anger? HARP 2.0 guidelines call for "NO" LTV restrictions. None. Zilch, nota... So why am I and thousands of other homeowners applying for HARP 2.0 mortgage refinancing being denied because we...



Scott continues... "do not meet the loan guidelines of "X" bank." It's (profanity removed). All banks are using the loan LTV ratio of 125%. 125% is NOT a "No Restrictions on LTV."

And now we here HARP 3.0 is coming out offering Non Government backed loans access to the HARP 2.0 Program. Oh goody... that really helps me and thousands of other people who have been denied HARP 2.0 loans because we are too far underwater.

What? How can we be denied a HARP 2.0 refinancing loan because we are too far under water when the HARP 2.0 guidelines call for no LTV restrictions??? It's all (profanity removed).

Oh! What do you know? I just read that HARP 3.0 lifts the LTV from 125% to 140% ??? What? Why even address the LTV under HARP 3.0 if there is supposed to be NO RESTRICTIONS ON LTV under HARP?!?!?!?!

But hey, you just keep on smiling Kate. Keep giving your nice smiley answers as the banks get richer and richer and us worker-bees keep on keeping on; working paycheck to paycheck, raising families, paying taxes and struggling to keep our heads above water.

Who will speak for us?

Kate Answers: HARP 2 Refinance Plan Fails Underwater Mortgages

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Scott,

My goal has remained constant since I began this site...

...empowering homeowners and home buyers to take charge of getting the best mortgage rate at the least cost, in order to secure affordable monthly house payments.

But under the present conditions, it would not be difficult to constantly express my anger over the treatment of homeowners in America.

However for visitors to my website, that could get very old, very fast, while reading page after page. So I focus on mortgage solutions, the best ones available at the given time.

Helping Homeowners Find Solutions to Keeping Their Homes and Affordable Mortgages

Scott, I understand your anger and frustration. On a personal basis, I am no different from many homeowners. My home and my life is severely impacted by decreasing real estate values.
If you are new to Get-Your-Best-Mortgage-Rate.com, you can read my story at...

1. Meet Kate Ford and the second part at...

2. Little Did I Know in Ten Minutes My Entire Life Was About to Change.
I have begun (and deleted) editorials several times that carried my personal feelings toward Making Home Affordable as being implemented by mortgage lenders. My concern has been that my opinions could discourage a homeowner from applying for and receiving relief from HARP 2.0, HAMP 2 Loan Modification, FHA Short Refinance, Short Sale, and other Making Home Affordable remedies.

Instead I continue on the path of answering questions, minus the lingo, to help homeowners find solutions to keeping their homes and getting affordable mortgages.

Has HARP 2 Refinance Plan Failed Homeowners with Underwater Mortgages?

In my assessment, since the October 2011 announcement and the major release in March 2012 of the new HARP 2.0 automated loan approval systems, bank cooperation with mortgage relief programs has been sadly lacking. And subsequently homeowners have learned the term "overlay".

What we are experiencing today has been repeated to a lesser degree over the years. Take the Federal Housing Administration as an example. FHA publishes guidelines but the lenders add their own restrictions, overlays. Mortgage brokers see not only variances between banks, but also between individual underwriters.

Coming back to Making Home Affordable, MHA removed LTV restrictions for HARP 30 year fixed rate refinances. But they still cannot convince the banks to comply. In part, this is because the banks are afraid they will end up having to buy the loans back.

Simply Put, Lenders Don't Have Confidence in HARP 2.0 Yet

When Fannie Mae removed the "reasonable ability to pay" clause, we were filled with hope that lenders would recognize their liability was greatly reduced. But obviously the banks are not yet convinced.
  • So they restrict loan-to-values.

  • They avoid homeowners with private mortgage insurance.

  • They steer clear of loans with lender paid mortgage insurance.

  • They raise their HARP 2 mortgage interest rates and increase refinancing closing costs.

  • And don't get me started about their fear of condominiums.

Your Suggestions on Get-Your-Best-Mortgage-Rate.com

History would tell us as the banks continue to cherry-pick their choice of mortgages for HARP refinances and find they are not being forced to buy them back, they will loosen their grip.

But it will take homeowner after homeowner applying for HARP and HAMP to have an affect. It will also require each homeowner to make their voice heard. This is why I've encouraged homeowners to write their federal, state, and local representatives in the government.

Sure our political reps send back canned responses that they can't interfere with banks. I understand that. But letter after letter can and will make a difference, if for no other reason than elected officials need your vote.

So Scott, you ask me where my anger is. Hundreds of letters to Ask Kate reduce me to tears. The state of homeownership in America breaks my heart. Some days I get so frustrated (and angry) because I don't know what else I can do to more of a difference.

So please continue suggesting what you would like to read on Get-Your-Best-Mortgage-Rate.com. Ask Kate for solutions. Send in your questions. Comment. I welcome your opinions. I also hope you will write your elected representatives.

Best wishes and feel free to write again,

Ask Kate

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HARP 2.0 Not Aggressive Enough
by: Joe

Hey there, Kate, Great to see you are spreading the word about the HARP 2.0 program. I know a lot of folks that are still struggling with this program, however, because the big banks will only honor the "unlimited LTV" aspect if the borrowers stay with that servicer of the mortgage.

I think this is just making the big banks richer and preventing consumers from searching elsewhere for the best HARP 2.0 mortgage rates. Again, great post on HARP 2.0 and I will bookmark your site so I can get future updates. Thanks! Joe K

Hi Joe, Kate here. Thanks! I appreciate your comment.

Not enough to-date, but some homeowners are experiencing success at being approved for HARP 2 using mortgage companies other than their loan servicer. However enormous improvement is needed!

Our voices DO make a difference. So start writing government representatives to insist that lenders and banks cooperate with Making Home Affordable - HARP 2.0, HAMP, and the other options.

Thanks for commenting, Kate

Click here to add your own comment.

You can also ask Kate about your mortgage at The Ultimate In Mortgage News.

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