HARP Loan Program and 2nd Mortgage Refinancing

by Mike in Anaheim, by Charleen in Minneapolis, and more...

Ask Kate about your HARP loan program and 2nd mortgage refinancing problems: Meet three homeowners who are trying to refinance second mortgages. Mike has been denied twice by Wells Fargo even though he is current on his 1st and 2nd liens. Charleen can't refinance her interest-only second even though she has reduced the balance by $13,000. Another homeowner can't understand why the bank won't subordinate since they are currently in 2nd position.


Question 1: HARP and 2nd Mortgage Refinancing

By Mike in Anaheim, CA

Dear Kate, I refinanced my first mortgage (80%) with Aurora Loan about four years ago.
HARP Loan Program 2nd Mortgage Refinancing Problems

The refinance closed with an alternative HARP program with the following rates, years 1 to 5 at 2%, year 6 at 3%, year 7 at 4%, and years 8 through 40 at 4.75%. Then the loan was sold to Seterus.

Since then, I tried to refinance my second mortgage (20%) with Wells Fargo at 9.0% interest rate. I have been denied the modification two times with Wells Fargo.

Now, do I qualify for the new Responsible Homeowner Refinancing Act of 2013 for any of my loans if both my accounts are current? But yes, I am about 175,000 under water.

Thank you for your help!

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: HARP and 2nd Mortgage Refinancing

Hi Mike,

Those interest rate adjustments sound like the HAMP loan modification program that requires a hardship. (See: Ask Kate about HAMP Modifications.)

If so, you might have options through Making Home Affordable's Second Lien Modification (2MP) program. This program is for homeowners who have modified their 1st mortgage, yet their 2nd mortgage is still making it difficult to keep up with monthly house payments.

But back to HARP which currently does not include 2nd mortgages. Being current on house payments is crucial to getting loan approval under the HARP 2 program. I can only assume it will continue to be under HARP 3. However, will this next version include 2nd mortgages?

The program is caught in a ridiculous loop of proposal after proposal in Washington DC and no one knows what the actual parameters are going to be. This is exactly why homeowners must write their politicians today, while there is still time for input.

So make your voice heard to Congress and President Obama. Tell them you want a 2nd mortgage option included in HARP 3!

Best wishes,

Ask Kate

Question 2: Refinance of 2nd Mortgage and HARP

By Charleen in Minneapolis, MN

Kate, I recently managed a streamline mortgage on my first mortgage. I wanted to see if I could do something with my 2nd mortgage as it is currently at 8.89 with a balloon at the end of the term of the loan.

My 2nd mortgage holder told me there was nothing they could do even though my home value had dropped and I have had my income drop.

Do I have any options? I have not missed any payments and have actually reduced my loan amount by over $13,000 though it was originally set up as an interest only loan. Thanks! Char

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Refinance of 2nd Mortgage and HARP

Hi Charleen,

It's admirable that you've reduced the balance by $13,000, especially considering that your 2nd is interest-only.

If there's equity in your property, you could try shopping other lenders. Without equity, your options are more limited.

Not to sound like a broken record, (that's become an outdated term, hasn't it?) but now is the time for homeowners to make a stink in DC and their local government.

Please write the Senate, House of Representatives, President and your local state officials today and let them know what you need included in HARP 3.0 refinancing, specifically 2nd mortgages. Go here to find out who your politicians are and how to contact them.

Then keep reading for 4 more ideas below.

Best wishes,

Ask Kate

Question 3: Harp 2 and 2nd Mortgage Subordination

Hi Kate,

After trying for some time, I was finally approved for a Harp 2 Refi saving me about $800 a month. This is particularly important because I was downsized from my job some months ago and had to take a 25% cut in pay in a new job. I have been struggling to stay current with my bills and so was happy to get this news.

However, my second lien holder has refused to subordinate to my 1st mortgage, saying my credit score is not as high as they'd like it to be.

Huh? They are are already in second position. I cannot refinance thru traditional methods as I'm underwater on my FIRST loan.

After numerous calls, letters, letters to the White House, my Congressman and the Consumer Financial Protection Agency, and intervention from my attorney, they won't agree, even though they have been made aware that if they don't agree I will eventually default on BOTH my mortgages.

My first mortgage holder (a servicing company) won't give me a HAMP, even though I have a Freddie Mac loan. They say the 'holder of my note does not consider a reduction in income as a hardship'.

At this point I seem to be out of options short of bankruptcy (13) protection. Any advice? I hope Harp 3 can force second lien holders to subordinate to help others. I think it will be too late for me. Thanks.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Harp 2 and 2nd Mortgage Subordination

I'm so sorry to hear your 2nd lien holder refuses to subordinate. Even sadder to hear your loan servicer and lender claim that your reduced income is not a hardship. Unbelievable!

Don't give up quite yet. Here are three pointers to help with modifying a mortgage and a link to another page on my website with questions and answers on subordinations and other 2nd mortgage issues.

1. Based on that bizarre statement by your loan servicer, call a Making Home Affordable HUD-approved housing counselor. Tell them what your lender said. Ask them for help dealing with your loan servicer.

2. To get the most benefit from your call, gather this paperwork first.

3. For best results with mortgage modification, try to get face-to-face with the traveling Making Home Affordable (MHA) team. Watch my blog where I announce the MHA Local Community Events. There is no substitute for looking them in the eye and telling your hardship story!

4. Next, read my answers to other homeowners about their 2nd mortgage and subordination struggles.

Best wishes,

Ask Kate


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HARP or HAMP After Default on 2nd Mortgage
by: Eng from Oxford, Michigan

Our second mortgage was in default and went through court system, now a lien against the home. Our first mortgage is current. Would we be able to qualify for HAMP or HARP?

Hi Eng, Kate here...

The default on your 2nd mortgage might deter an underwriter from approving a HARP refinance. But you will never know if you don't try. Much of the success will be dependent upon the combination of your remaining qualifications.

If your HARP loan request is denied, call your loan servicer at once to get the ball rolling on HAMP modification.

I'd be careful not to plunk down too much upfront cash on the HARP application, especially non-refundable deposits. For HAMP, there are no out-of-pocket application fees which makes a modifying a mortgage less painful.

Best wishes, Kate

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