HARP Refinance Fees and Underwater Loan Mayhem

by Emma in Oklahoma, Terry in Texas, Deb in Minnesota, Jim in Illinois

Ask Kate about HARP refinance fees, underwater investor-backed loans, and 2nd mortgage subordination: Emma asks which HARP closing costs are required to be paid by the borrower. Terry asks how to refinance an underwater investor-backed home loan.


Deb must decide between keeping her loan modification and paying $7000 for a HARP refinance. Jim's 2nd mortgage lien holder refuses a subordination request required by HARP.

Who Pays HARP Refinancing Fees

By Emma F. in Tulsa, OK
How Much Are HARP Refinancing Fees


What closing costs are required from the borrower on the HARP refinance loan?

***zz-portrait-left.shtml*** Ask Kate answers: Who Pays HARP Refinancing Fees

Hi Emma,

Closing costs for the HARP refinance program are handled differently than the HAMP modification program.

HARP closing costs should cost no more than a traditional refinance. In fact, in some instances, they may even be less.

The fees can be grouped into two categories, non-recurring closing costs (one time costs such as loan fees or title insurance) and recurring closing costs (ongoing expense such as property tax and homeowners insurance).

Go here for the explanation of mortgage closing costs and Good Faith Estimates.

The borrower can pay them by increasing the loan amount. Alternately, the interest rate can be increased. Both methods finance the closing costs over the life of the loan. But there is nothing stopping you from negotiating lower costs with the lender.

Click here to learn how to reduce and negotiate lower closing costs.

Modification Closing Costs vs HARP Closing Costs

It is worth noting that the HAMP modification program does not charge fees to the borrower. This is, in part, because the loan approval process is based on hardship relief.

Best wishes,


How to Refinance an Investor-Backed Mortgage

By Terry C. from Humble, TX
How to Refinance an Investor-Backed Mortgage


We have an investor backed loan that is also underwater.

I have spoken with Quicken loan and was told they could not help us.

Our previous lender, Ocwen, told me that they do not refinance loans.

***zz-portrait-left.shtml*** Ask Kate answers: How to Refinance an Investor-Backed Mortgage

Hi Terry,

If you are disenchanted by Making Home Affordable's underwater refinancing program, I can understand why. HARP 2.0 is exclusively for Fannie Mae and Freddie Mac mortgages.

If you had a Fannie Mae or Freddie Mac mortgage, you would be free to shop lenders. But since your home is secured by an investor-back loan, choosing between participating banks is not an option for you.

Not sure what type of mortgage you have? Here's how to find out if your mortgage is backed by Fannie Mae or Freddie Mac.

Insist on HARP 3.0

This is why the next generation of underwater mortgage refinancing (aka HARP 3.0) has to happen!

Read about the HARP 3 proposal and what you can do to make it happen.

Best wishes,


Harp Program Closing Costs

By Deb M. from Owatonna, MN
Harp Program Closing Costs


We want to refinance with the HARP program.

The one company we actually sent all our paperwork into wants over $7000 for closing costs.

They assured me most of it was going to be turned back over to us, as far as escrow, etc. and the interest rate is up there.

We currently are on a modification program at 3.75% until 1/2015, than we go up to 4.75%.

Should we wait awhile or take their offer?

***zz-portrait-left.shtml*** Ask Kate answers: The Harp Program Closing Costs

Hi Deb,

Have you received a copy of a signed and dated written Good Faith Estimate (GFE)? Without a written GFE, there is no way to verify your mortgage originator's claim that fees are mostly recurring closing costs.

You actually need to read through the GFE to see for yourself which closing costs are being charged. Study the loan fees and discount points! Do property taxes and homeowners insurance in the escrow section actually equal $7000?

See Emma's letter for help reading a GFE.

Deciding to Refinance a Mortgage

Only you can decide whether or not to proceed with a refinance. But considering this may help: Is the security of a fixed rate more important to you than keeping your modified payment that can potentially go higher after another year or so.

For more help, read Refinancing a Home Mortgage to Save Money... I Think.

Best wishes,


HARP Refinance without 2nd Mortgage Subordination

By Jim from Lisle, IL
HARP with 2nd Mortgage Subordination Declined


My mortgage was set up in two parts. Both loans were acquired by Sovereign (Santander) bank and Freddie Mac. The house is upside down and was approved without an appraisal for a refinance under HARP but Sovereign refused to subordinate the second mortgage.

The home is currently worth about $420,000-$430,000. The primary mortgage is $370,000 and the secondary is $65,000.

Shouldn't I be able to get one loan large enough to pay off the secondary mortgage so I only have one loan, preferably through HARP without the appraisal, but worst case, outright.

***zz-portrait-left.shtml*** Ask Kate answers: HARP Refinance without 2nd Mortgage Subordination

Hi Jim,

Unfortunately, since your mortgage is underwater, you have hit a brick wall. HARP guidelines do not allow paying off a 2nd mortgage by rolling it into a larger 1st mortgage.

The HARP program offers only two options to homeowners with a 2nd mortgage. Pay off the 2nd with your hard-earned cash (unlikely) or wrangle a subordination agreement out of the 2nd mortgage lien holder.

Read how to get your 2nd mortgage lender to cooperate at HARP Refinance Made Impossible.

Best wishes,



Ask Kate about Your Mortgage

Anyone can ask Kate a question or add a comment at the bottom of this page.

Recent Ask Kate Answers

***zz-newsletter.shtml*** ***zzz-link-harp-news.shtml***

Tell a Friend

Please share HARP Refinance Fees and Underwater Mortgage Mayhem with your friends!

> > HARP Refinance Fees

Comments for HARP Refinance Fees and Underwater Loan Mayhem.

Click here to add your own comment.

Fannie Mae and Freddie Mac Mortgages
by: Scott from Clearwater, FL

Hi Kate,

Why wouldn't Fannie Mae or Freddie Mac own my mortgage?

I appear to be one of the unfortunate few with an underwater home who can't refinance because Fannie Mae or Freddie Mac don't own my mortgage.

My second mortgage is at close to 7 percent, and it's a serious damper on our ability to save for the future. Any ideas?


Hi Scott, Kate here...

When you originated your loan, the lender (presumably) placed it in the best program for your qualifications.

But this also depends on who the lending company has negotiated with to buy their loans. Sometimes, this process ends up with several layers of companies.

Additionally, the loan might be underwritten with Fannie Mae and Freddie Mac guidelines but sold to another type of investor.

There is little transparency for the borrower. The borrower might ask who will be servicing it but up until the last few years, most homeowners with a mortgage did not question the underlying investor.

Then HARP came along and mortgages not backed by Fannie Mae or Freddie Mac were fresh out of luck. They still are in this regard.

But on the flip side, because your mortgage is not backed by Fannie or Freddie, you might be eligible for a principal reduction and hardest hit funds for 2nd mortgage elimination.

Read about them here before you call your servicer: Hardest Hit Funds - Principal Reduction Program .

Best wishes, Kate

I Don't Have a Fannie Mae or Freddie Mac Loan
by: Marilyn from West Bend, WI

Hi Kate:

I don't have a Fannie Mae or Freddie Mac Loan and I'm underwater with my loan.

I spoke to someone this morning at Quicken Loans and he told me that HARP is the only one who can help Underwater loans. Is he correct with this statement?

Do you know how I can get my interest rate fixed? Presently I'm at 7% and I am financed about $30,000 over what the property is worth.

I've applied to my loan company for a short sale and a loan modification, both of which I've been denied.

Hi Marilyn, Kate here...

Yes, unfortunately the HARP 2 program is the only game in town for refinancing underwater mortgages at this point. Please follow through with making your voice heard regarding HARP 3 proposals, as I also encouraged Terry to do. (See Terry's letter up above.)

Then call a Making Home Affordable housing counselor (there's no charge for their service) at 888-995-HOPE (4673) to ask why both your loan modification and short sale were denied. Ask them for help working with your lender and how you could improve your chance of being approved.

Read about Making Home Affordable housing counselors before calling.

By the way, you do not need a Fannie Mae or Freddie Mac mortgage to be eligible for a HAMP loan modification.

Best wishes, Kate

Click here to add your own comment.

You can also ask Kate about your mortgage at Refinancing Advice The Nuts and Bolts.

Recent Articles

  1. Lock Mortgage Rates - How To Avoid Hidden Fees

    Aug 06, 18 11:58 AM

    If you lock mortgage rates over the phone, how do you protect against excessive points and hidden closing costs? Learn what to do when your lock is threatened.

    Read More

  2. Finding Low Down Payment Mortgage Financing

    Aug 06, 18 11:53 AM

    Getting a low down payment mortgage: Learn the first two steps to financing niche properties in resort areas. Tip: It's not about timing the real estate market!

    Read More

  3. Ten Best Kept Secrets to Low Mortgage Payments

    Aug 06, 18 11:45 AM

    Ask Kate's secrets to low mortgage payments help homeowners understand industry lingo related to refinancing. Learn how to get your best mortgage rate!

    Read More