HARP 3 Mortgage Refinance News

by "Left Out" in California

HARP 3.0 Mortgage Refinance News: Hi Kate - I have an underwater mortgage but am not eligible for HARP or HAMP. I don't want to walk away from my home, but it seems I don't qualify for any mortgage modifications since I refinanced into my current loan after the May 2009 cutoff.



"Left Out" continues... I refinanced late in 2009 to take advantage of better interest rates and intending to continue occupying my home. At the time, prices had fallen, but were still above what I owed on the mortgage and "stable" according to the appraisal.

Unfortunately I had to move out of state for work and so I decided to rent out the property while I waited for prices to recover. However, since then prices have plummeted. The property is worth 60% of what I owe on the mortgage and I am losing money even with a tenant. Any advice?

Kate Answers: HARP 3.0 Mortgage Refinance - HARP 2.0 News

Ask Kate at Get-Your-Best-Mortgage-Rate.com

Dear "Left Out",

With an estimated 11,000,000 underwater mortgages yet only 1 million qualified to refinance, it isn't hard to see that homeowner assistance is a necessity. You are a perfect example!

So why can't the remaining 10 million borrowers refinance under the HARP 2.0 plan?

1. Many borrowers' mortgages were sold to Fannie or Freddie after the May 31, 2009 eligibility date.

2. Others have non-government sponsored entity (non-GSE) mortgages, which means they are not backed by Fannie Mae or Freddie Mac.

3. Mortgage lender overlays and inconsistencies. Participation (and enthusiasm) in the program is less than stellar, even though the new HARP 2.0 plan is a vast improvement over the bad behavior of the original HARP 1 program.

Yet, the fact remains, lenders continue to add their own restrictions. But HARP 3.0 could change this! Let's see how!

HARP 3.0 Mortgage Refinance Background

Is HARP 3.0 Fact or Fiction
When President Obama first proposed his streamline refinance plan in January 2012, it was not yet known as HARP 3. (In fact HARP 2.0 was not fully released until March 2012!)

You can read the initial proposal that I announced at Ask Kate about the Obama Refinance Plan and again in my update a couple of months later at Is HARP 3.0 Fact or Fiction.

How HARP 3.0 Can Help Homeowners

Although HARP 3.0 for upside down mortgages is still stuck in the Senate as of today, May 15, 2012, it seems to be taking more shape. Here is the recent scuttlebutt on the streamline refinance proposal that is looking friendlier than HARP 2.0.
  • Eliminate requirement for mortgages to be backed by Fannie Mae or Freddie Mac.

  • No appraisals.

  • Drop the minimum credit score requirement to 580.

  • Banks finance the program instead of taxpayers and homeowners.
A related bill just introduced by 2 senators, Responsible Homeowner Refinancing Act of 2012, also proposes fines for second lien holders and private mortgage insurance companies who unreasonably block homeowners from taking advantage of the plan.

Read more about President Obama's plan to streamline underwater mortgage refinances in the following links...

Alternative Mortgage Refinance and Modification Programs

While we wait for HARP 3.0 to (hopefully) become a full-fledged refinance plan, where can homeowners turn for underwater mortgage help? Follow my links to learn more about:

1. FHA Streamline Refinance for homeowners with FHA financing.

2. HARP 2.0 for homeowners with Fannie Mae and Freddie Mac mortgages.

3. FHA Short Refinance for homeowners who do not have FHA home loans.

4. HAMP Phase 1 and 2, mortgage loan modifications by Making Home Affordable.

Don't fit one of these categories? Bookmark this page and save it in your favorites to watch for HARP 3.0 underwater mortgage updates.

Lastly, difficult options to discuss are included in Home Affordable Foreclosure Alternatives (HAFA), such as short sale, deed in lieu, and deed for lease. However I hope you can hang in a while longer until we know if the proposed HARP 3.0 plan is indeed fact or fiction.

Good luck and best wishes,

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Just Applied for HARP
by: Starone1

I just talked to Huntington Bank about refinancing under HARP. But our payment will go up $583. This is because we bought the end 2004 at the height of the bubble and we are $75,000 underwater.

So even though our interest has been low in an "interest only" loan (3%), we have only been paying $40 extra per month in principle. In other words hardly no principle applied in 7 years.

Should we go ahead with the HARP and try to come up with the extra payment, or should we wait and try to get a modification under HAMP 3.0 if it comes to fruition? We make $6200 together a month, but will pay $1778 (1st) plus $696 for a second mortgage. That is almost $2500 in house payment alone.

Hi Starone1, Kate here. Ouch, refinancing to get a higher payment is not much fun. However, I can see raising your payment to achieve mortgage stability, in other words, going from an ARM to a fixed rate.

But I don't know if waiting for a HARP 3 (not HAMP 3) refinance (not modification) will generally result in a lower monthly house payment than HARP 2.

I would definitely shop several lenders to compare good faith estimates and make sure this offer is a good deal.

Now if you wanted to go after a HAMP loan modification instead, that is another choice. Read about using HAMP as a HARP 2 Alternative here.

Best wishes, Kate

PS Starone 1 has written me with more details. Her letter and my next answer can be found at If HARP 2 Refinance Increases My Mortgage Payment

Yet another Proposal for Underwater Mortgages
by: Ask Kate

Another proposal to aid struggling homeowners is being talked about in Washington DC under the name of the Preserving American Homeownership Act of 2012.

Mortgages would be written down to 115% of the current value by Fannie Mae, Freddie Mac, and Federal Housing Administration. After homeowners make timely payments for 3 years, the mortgage balances are again reduced, this time to 95%, creating equity.

Borrowers would agree to share half of the proceeds with their respective backer, FHA, Fannie Mae, or Freddie Mac, if the house is eventually sold.

Write your elected officials in Congress if this plan interests you. If you do not have a Fannie Mae, Freddie Mac, or FHA home loan, ask for all underwater mortgages to be included in this equity producing plan.

Extension or removal of May 2009 HARP refinance cutoff.
by: Anonymous

Harp 3 in proposal stage but many homeowners are underwater and unemployed, struggling to keep the home like me. Will harp 3 extend or remove that cutoff date? If I am allowed to refi, I can pay $300 less a month. Tried a lot and not eligible because of cutoff date for only one day.

Hi, Kate here, That is painful - missing the cutoff by one day. There IS actually some scuttlebutt that the HARP 3.0 eligibility date will be extended from May 31, 2009 to May 31, 2010.

But HARP 3.0 is stuck in Congress. Keep in mind, if your elected officials' homes are not affected, it's possible they do not feel your pain. So write them and ask for action.

HARP 3
by: Karen from Orange

Hi Kate, My home was recently appraised at $417,000. I owe $297,094 and have a HELOC owing $140,000. My mortgage is not backed by Fannie or Freddie and I am currently paying 6%. If HARP 3.0 passes would I be eligible? There doesn't seem to be any other programs out there that would allow me to refinance to a lower rate. Thanks in advance, Karen

Hi Karen, Kate here. I should preface by saying that the HARP 3.0 plan is still in the proposal stage. But so far, the information available points to helping underwater mortgages (financed for more than than appraised value) refinance into a lower interest rate. Mortgages not currently insured by Freddie Mac or Fannie Mae are included in the proposed refinance program.

HARP 2.0 leaves out too many homeowners. But don't take for granted that your reps in Congress feel your pain. We have to remind them about the lack of financing options for homeowners without Fannie or Freddie loans.

Fax. Text. Voicemail. Email. Whatever communication you have available, use it to contact your elected officials.

Tell them your story and that HARP 2.0 leaves you out in the cold. Explain how much you need an affordable monthly house payment and what that would mean to your family.

Watch my blog for upcoming news on HARP and HAMP programs from Making Home Affordable.

Click here to add your own comment.

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The information you obtain at this site is not, nor is it intended to be, a substitute for financial, real estate or legal advice. You should consult an attorney, accountant, lender or real estate agent, as applicable, for advice regarding your individual situation. Comments and opinions found here are not necessarily those of Get-Your-Best-Mortgage-Rate.com

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