HARP II Refinance with PMI vs Strategic Default

by Anonymous

Ask Kate about HARP II Refinance with PMI vs Strategic Default: Kate, I've never been a day late on paying my mortgage, even when I had no health insurance, and struggled to pay for school supplies for my children. I am a perfect fit for HARP but I'm considering a strategic default.


Anonymous Continues... I have a servicer currently as my mortgage lender who can't refinance. I've been turned down 4 times for HARP because of a high debt to income ratio, and the fact that I have PMI are the reasons.

And that's only with banks that were willing to take a look at my application-most big banks won't help me because I'm not a current customer. I've been told to just "hang in there" for the guidelines of HARP 2.0 which may improve my chances of getting refinanced.

I'm considering a strategic default, but I'd really like some advice before I make that serious decision.

Kate Answers: HARP II Refinance with PMI vs Strategic Default

***zz-portrait-left.shtml*** Dear Anonymous,

PMI (private mortgage insurance) has really mucked up the water for homeowners attempting to refinance.

But here are 3 options that might help you decide between strategic default and HARP II refinancing. There is also limited information on the fledgling refi plans of President Obama.

1) HARP II: Wait until March of 2012 for announcements regarding HARP II, specifically the expanded provisions for homeowners with PMI.

Go to HARP II Eligibility Requirements Announcement for my most recent information on HARP II announcements.

2) President Obama's Refi Plan: The President has announced (at the end of January 2012) that he is working on an FHA refinance, with no appraisal being required, for homeowners who do not qualify for HARP. But as of today, this is only in the talk phase.

In addition, I do not know who can participate, those turned down for a HARP refi or just those who don't have a Fannie Mae or Freddie Mac mortgage. I'll post when more information is available.

3) Strategic Default: If you decide on using strategic default (I feel your agony), Making Home Affordable offers HAFA, the Home Affordable Foreclosure Alternatives.

Both the options of Deed in Lieu and Short Sale alternatives give lump sums (currently $3000 in February 2012) upon closing to the homeowner. Go to Special Edition Making Home Affordable Options to read about the added benefits which might soften the blow of strategic default a bit.


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