HARP 2 Update Mortgage Refinance Alternatives

by DT in CT, Francine in AZ, Ashley in NC, Jennifer in AR, Billy in CA

Ask Kate for HARP 2 update and mortgage refinance alternatives: A favorite cartoon sums up the first days of HARP 2.0. The lender, Fannie Mae, Freddie Mac, and PMI company were perched eagerly alongside each other in a canoe. They held up their oars in salute, ready to navigate the refinance rapids. But on the count of 3, what do you suppose happened?


Ask Kate continues... Tangling their oars, the canoe tipped over and sunk. Sound familiar?

The following 5 questions are from homeowners struggling with HARP 2 and who may benefit from other Making Home Affordable modification and alternative refinance programs.

1. How do we refinance if we don't have a Fannie Mae or Freddie Mac mortgage?

DT from Connecticut: Hi Kate, I am in tears. We have never missed a darned mortgage payment. Our credit score is 790. Our income is over 150k a year and we are stuck in this foolish loan!! We need to refinance it but we can't because of underwater LTV.

I had cancer and we had to get a subprime mortgage five years ago. Just before the market went nuts. Please what do we do? There must be others out there with the same problem!

***zz-portrait-left-super-kate.shtml*** Ask Kate answer: Hi DT,

I can feel your frustration. For homeowners with FHA financing, there is the streamline FHA refinance with reduced mortgage insurance premiums.

(But this is not to be confused with the proposed Obama streamline refinance plan.)

However, just like HARP, FHA streamline is not available to homeowners with subprime mortgages.

But perhaps your loan servicer participates in the FHA Short Refinance which is NOT for existing FHA mortgages. The program will reduce your loan balance to 97.75% and lower payments. Call your lender and write me back with your progress, please.

If your lender does not participate in FHA short refinancing, consider the option I tell Francine about (see below).

2. Home Affordable Modification Program, HARP Alternative

Francine from Sun Lakes, Arizona: Kate, My home is worth about $100,000. I need to borrow $182,000.

I know that HARP announced a new program to help with this type of request. Do you have any suggestions? My credit score is about 605, if that helps. Thank you so much for you assistance.

***zz-portrait-left-super-kate.shtml*** Ask Kate answer: Hi Francine, I think you are referring to HAMP, the Making Home Affordable Modification Program.

In order to be eligible, homeowners must demonstrate a financial hardship and be in danger of falling behind on mortgage payments.

HAMP has several interesting components to help homeowners get an affordable mortgage payment using principal reductions, lowering the mortgage rate, and combining with other lesser know Making Home Affordable Options.

Go here for more details: HAMP vs Negative Amortization Loan.

3. LPMI and HARP 2 Refinance

Ashley from Raleigh, NC: Kate, I recently submitted a question about paying LPMI and trying to refinance into HARP. You had advised us it is available.

After speaking with our mortgage servicer, they state they cannot refinance my mortgage with HARP because of the LPMI. I am a bit confused why Fannie Mae and Freddie Mac have allowed homeowners with LPMI to refinance, but our mortgage holder will not allow it.

I also find it suspicious that I was abruptly disconnected after reading your response to them on overlaying guidelines. Any advice?

***zz-portrait-left-super-kate.shtml*** Ask Kate answer: Hi Ashley, According to Fannie Mae and Freddie Mac, being able to refinance with Lender Paid Mortgage Insurance (LPMI) is one the chief objectives of HARP 2.

You are correct that your lender is adding additional requirements to the mortgage giants' guidelines.

I certainly hope that you were not disconnected from your lender because they were threatened by your understanding of basic HARP 2 guidelines!

Making Home Affordable is not a cloak and dagger program. Try a different lender.

The scoop on LPMI for HARP 2 is found here: Lender Paid Mortgage Insurance HARP Refinance.

4. Alternative HARP Refinancing Options

Jennifer from Branch, AR: Kate, I am trying to refinance my home. My credit scores are in the mid 600's because when I was married, my ex-handled our house payments and let us get 90 days behind on the payments.

I have been completely caught up for almost 2 years and have never been behind. But I was told by a loan office that because I was 90 days behind on my mortgage, I can't refinance until I've gone at least 3 years without being 90 days behind. Is there somewhere that will refinance me now?

***zz-portrait-left-super-kate.shtml*** Ask Kate answer: Hi Jennifer, HARP 2 guidelines state no more than one 30 day mortgage delinquency in the year before applying, but none in the immediate 6 months.

There is no designated waiting period after foreclosure or bankruptcy. However, as anyone could expect, HARP 2 does include a standard credit risk assessment.

Why not try another lender or two and compare the results. Another idea is to look into a HAMP Loan Modification with your loan servicer. (See Francine's question above.)

5. Declined for HARP 2.0

Billy from California: Kate, Just got declined for HARP 2.0 refinance and they they did not give me a reason since it is an automated system which gives a decision.

I meet all credit and income criteria but have a large HELOC and am underwater. I thought HARP 2.0 will be a solution for me - but it looks like it doesn't cover everyone.

***zz-portrait-left-super-kate.shtml*** Ask Kate answer: Hi Billy, They must give you the reasons of your mortgage denial in writing. Period.

New HARP 2.0 guidelines state there is no combined loan-to-value restriction for 2nd mortgages. But the 2nd must have acceptable terms and its lender be willing to subordinate to the HARP 1st at closing.

Go here for more details: New HARP 2 Loan Announcement to review the highlights and be able to discuss terms with your lender. Unless that is, they hang up on you too, as Ashley experienced yesterday (see above).

Best refinancing wishes to everyone and feel free to comment down below,


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Need Help
by: DT from CT again

Kate, I am going to get directly to the point. I have no time to waste. I am ill, I can not read through all this. I can't physically or mentally comprehend. I am still paying four thousand dollars a month I am under water on my loan. I am not insured by Freddie or Fannie Mae.

What do I qualify for? Anything? Please advise, simple question, very straightforward. Please help me.

Hi DT, Kate here. I understand how simple your question seems. Unfortunately, the answer is more complicated. But I'll do my best to keep it short.

HAMP - Home Affordable Modification Program is for homeowners who, on top of having underwater mortgages, also have personal hardships that reduce the affordability of their mortgage payments.

Call your lender and ask if you qualify for HAMP. Please describe your health in detail when you call them.

You will probably need to be tenacious if your lender is busy. I understand how difficult that can seem with compromised health. Think about enlisting the help of a trusted friend or relative to help.

I really wish you the best, Kate

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