HARP 2 Refinance Program Underwater Mortgages

by Mike in Mesa, Arizona and by Rhonda in Lakewood, Colorado

Ask Kate about HARP 2 refinance program for underwater mortgages: Is a HARP 2.0 refinance possible with a subprime loan? Mike called Fannie Mae in 2011. They told him because he has a subprime mortgage, he isn't eligible for HARP! Rhonda wants to know if refinancing under the new HARP program is possible with a past bankruptcy.


Is HARP 2.0 Refinance Possible with Subprime Mortgage

By Mike in Mesa, AZ

Hi Kate, Is a Harp 2 refinance possible with a subprime loan?

Back in 2007 I refinanced my house. I never missed a payment with the new refi and was on time.

I called Fannie Mae in 2011 and they said my loan is Subprime, meaning I cannot refinance under the new Harp! Is this true under the new rules of Harp 2.0 of 2012? Let me know. Thanks, Mike

***zz-portrait-left.shtml*** Ask Kate answer: Hi Mike, I'm so glad you asked this question.

Fannie Mae says if they are the investor on a subprime loan, the loan may be eligible for consideration under a HARP 2 refinance IF it is underwritten using DU Refi Plus. (Keep reading to find out what this means.)

However Fannie Mae continues to say a subprime loan is not eligible to be manually underwritten.

Fannie Mae's software program for automated underwriting is called DU Refi Plus. But it took Fannie Mae from October 2011, when the program was first announced, to March 2012 to update the software with the new guidelines.

See New HARP 2 Loan Announcement March 2012 for details.

So I think the 2011 answer from Fannie Mae was both right and wrong.

In 2011, the software was not equipped to underwrite subprime mortgages owned by Fannie Mae under the Making Home Affordable Refinance plan. Many homeowners with underwater mortgages were left in limbo during these months.

But it would have been nice for you to know that hope for subprime loans was coming in 2012, due to updating the guidelines in the software!

Still not sure about DU Refi Plus and how it could affect you? Go here to read more about automated underwriting vs manual underwriting at Why are HARP 2 Mortgage Lenders Inconsistent.

Mike, please let us know the progress you make refinancing with HARP 2. It will also help other borrowers with subprime loans.

Best wishes for your refinance,


Is Refinancing Under HARP 2 Program Possible with Past Bankruptcy?

By Rhonda in Lakewood, CO

Kate, Do you know if the HARP program requires borrowers to reaffirm their current loan if borrowers have a past bankruptcy?

Long story short, we were approved for a HARP refinance through our current lender. We were told that our loan was approved subject to 1 year current payment history, which was provided quickly and condition met.

However more than a week later, we were told that we now were required to reaffirm our current loans before Lender would move forward. Lender is stating that this is a requirement of the HARP program, not an internal requirement.

Problem is, we filed BK almost 3 years ago and cannot reaffirm at this point (which we were advised NOT to do by our attorney). We've hit a brick wall with our current Lender as they are not willing to work with us and I am EXTREMELY frustrated.

They offered a loan modification but that option hurts us more than it helps. I don't want to start over with another Lender or deal with the Subordination issue, but I am calling around to see if other Lenders can work around this issue.

Any advice? Thanks. Rhonda

***zz-portrait-left.shtml*** Ask Kate answer: Hi Rhonda, I've heard from other borrowers that their lenders are saying their mortgages must be reaffirmed after bankruptcy to be approved for HARP.

I wish I knew how to answer this as I can hear the same frustration in your voice as the others who have written me about this.

Here's a couple of thoughts. First I would ask another lender or two to run your loan through DU Refi Plus, the HARP automated underwriting system for Fannie Mae, to see if this bankruptcy condition gets eliminated.

Secondly, I would call your attorney to discuss this and ask for advice.

Then write the mortgage company and explain in detail what your attorney told you and ask what they would need to waive the condition. Be sure to get this in writing.

May I ask you a favor? Will you please post back here in a comment or at Ask Kate with the results. I know it will be of help to others... and to me. :)

One more thing, was your lender offering their own in-house version of a loan modification? If so, and you would like to compare it to the Making Home Affordable modification details, go to HAMP Phase 2 Mortgage Modification for more information.

Best wishes in refinancing,


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