Is HARP 2 or HAMP Best

by Laraine in Chowchilla, Marjorie in Orlando, Eduardo in Miami, and John in Tucson

Ask Kate if HARP 2 or HAMP is best: Although Home Affordable Refinance Program (HARP 2.0) and Home Affordable Modification Program (HAMP) sound similar, they actually meet two different needs. Discussed previously on Get-Your-Best-Mortgage-Rate.com, readers are asking for additional key elements to better understand their options...


HAMP Modifications vs. HARP 2.0 Refinances

By Laraine H. in Chowchilla, California:

Kate, I potentially qualify for both the HAMP and the HARP 2.0 plans. Which is the best option to pursue?

What type of interest rates are given on a HARP 2.0 mortgage loan from a participating bank? In my search, the banks seem to be very comparable.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answer: HAMP Modifications vs. HARP 2.0 Refinances

Hi Laraine,

HAMP is primarily designed for homeowners who are struggling to avoid foreclosure due to a hardship.

HARP has no hardship requirement. In fact, HARP is not intended for those in imminent danger of losing their homes by bank foreclosure.

But the two Making Home Affordable plans cross over in purpose occasionally.

You most likely will choose a fixed rate mortgage for HARP. Banks set their own HARP interest rates and closing costs. If you are finding banks to be competitive, please report back here which ones seem to be priced the best. I'm sure other readers would appreciate knowing!

The HAMP mortgage rate is fixed during the first couple of years. Afterward, it gradually adjusts on an annual basis until reaching the maximum rate.

HAMP offers principal deferments under the program offshoot, Principal Reduction Alternative (PRA). PRA reduces monthly house payments because mortgage payments are based on the reduced loan amount. The deferred portion is not due until the home is sold or refinanced.

If you have a 2nd mortgage, it may also be eligible for a loan modification under the Second Lien Modification Program (2MP).

As the homeowner, you do not pay closing costs, however banks report to credit bureaus that you have modified your mortgage under a federal government plan which could lower your credit scores.

For more details on Home Affordable Modification Program, go to HAMP Phase 2 Loan Modification News.

Best wishes,

Ask Kate

How Can I Compare HAMP 2 Closing Costs and Mortgage Rates

By Marjorie in Orlando, Florida:

Kate, How can I compare closing costs and mortgage rates on Hamp 2 refinancing across approved providers? I am in Orlando, FL and am under water in a condo loan of $128,000, valued currently at 80,000.

I was quoted $5000 in closing costs and 4.875% interest from my mortgage holder. I want to shop these rates but am only interested in comparing apples to apples.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answer: How Can I Compare HAMP 2 Closing Costs and Mortgage Rates

Hi Marjorie,

Short answer (especially for me)... You can't compare HAMP closing costs, fees, or mortgage rates among lenders!

This is because a homeowner can only go through their loan servicer for a HAMP loan modification. But good news! There are no closing costs with HAMP!

Perhaps though, you are thinking of the new HARP 2.0 plan recently announced. Remember, mortgage companies and banks set their own interest rates and closing costs for HARP.

To date, there is no published list of Fannie Mae lenders participating in the HARP plan. However Freddie Mac publishes a partial list.

For more details on comparing mortgage rates and closing costs, go to Ask Kate how to Understand Mortgage Closing Costs and Reduce Mortgage Refinancing Costs.

Best wishes,

Ask Kate

HARP Mortgage Refinancing After Loan Modification

By Eduardo B. in Miami, Florida:

Kate, Is it possible to HARP refinance my mortgage after a HAMP loan modification made 24 months before?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answer: HARP Mortgage Refinancing After Loan Modification

Hi Eduardo,

Yes, per the guidelines it is. But your mortgage payments can have no more than one 30 day late in the prior year and none in the immediate 6 months before applying for HARP 2.

You will also need to document the qualifying HAMP hardship has ended and is no longer affecting your ability to afford your mortgage payments.

Go to Can I HARP refinance after a short sale on another property for more details on HARP 2 initial eligibility requirements, payment history guidelines, and borrower benefit requirements.

Best wishes,

Ask Kate

Ask Kate's Mortgage Affordability Newsroom

April 2016: New Fannie Mae and Freddie Mac Principal Reduction Program.

January 2016: The Mortgage Forgiveness Debt Relief Act Update.

September 2015: Fannie Mae and Freddie Mac Improve Loan Modifications.

Keep on the right path at A Homeowner's Survival Guide to the Intimidating Mortgage Process.

Have You Seen the Most Recent Ask Kate Answers

Expanded HAMP Tier 2 Requirements, Features & Benefits

New HAMP Tier 2 Mortgage Modification News - Helping more homeowners get affordable monthly payments.

How to contact Washington DC about the HAMP program - Your voice makes a difference!

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Comments for Is HARP 2 or HAMP Best.

Click here to add your own comment.

How long does the loan process go on?
by: Kenosha,WI USA

Kate, how many months does it take to get an answer on a mortgage application? And why do we, and our tax man have to keep sending the same paperwork? My account manager told me step by step what info he needed on my 4506T yet his partner keeps saying it is not enough. This is so upsetting when you're old and there is no one to ask questions to.

Hi Kate here...

I'm sorry to hear this. When some mortgage companies have more than enough business, they tend to cherry-pick the easiest applications to process.

If you are applying for a loan modification, your only choice is to to go through your loan servicer. So having a captive audience decreases their need to compete with other lenders in the service realm. However you can call a Making Home Affordable housing counselor to help you. Read how to use free MHA housing experts.

If you are getting a mortgage to buy a home or to refinance your existing mortgage, remember you have the right to switch lenders in most cases. Go here to learn about shopping for a lender at How to Refi without the Glitch.

Best wishes, Kate

------------------

Thanks so much for your getting right back to me Kate. And For telling me to get together with the Hope Counselors. Also I actually found an answer of sorts to my question just before coming on your site again. I was reading a article about BOA foreclosures, I found a paragraph that says Servicers should decide how to respond to borrowers with in O N E month receiving their application.I appreciate your help, thanks again.

Hi, Kate here once more...

I'm happy to know you have your answer. My door is always open.

Best wishes, Kate
HARP 2.0 after loan modification 24 months ago
by: John B. from Tucson, AZ

Hi Kate, Around 2 years ago I completed a loan modification through my loan servicer Wells Fargo due to a financial hardship. My interest was lowered by 1% however my loan was extended out to 40 years fixed rate.

Now I'm trying to take advantage of much lower interest rates and to shorten my loan to either a 20 or 30 year fixed rate loan.

I've called Wells Fargo numerous times and have been told that I do not qualify for HARP 2.0 because I've had a loan modification. I've spoken to different reps and managers there but no one seems willing to help. As far as I can see I do qualify for HARP since I've been current with my payments since my loan modification (2 years ago), it's owned by Freddie Mac and was purchased back in 2006.

I've reached out to other companies (i.e. Quicken Loans, BofA, etc) to see if they'd be willing to refinance under HARP but have really gotten nowhere.

I really don't know what else to do or who to reach out to and wanted to see if you could provide some guidance. Your help is greatly appreciated.

Hi John, Kate here. Guidelines state a previous HAMP loan modification will not prevent a homeowner from refinancing with HARP 2.0. But the problem is that lenders have the right to overlay their own requirements on HARP guidelines. (See my answer above to Eduardo from Miami, Florida

Now consider this. When the mortgage business is booming and loan applications are a dime a dozen, lenders go cherry picking for the easiest to process.

HARP 2.0 after doing a loan modification

So the trick is to make your refinance cost-effective for lenders. This appeals to mortgage originators who are paid on commission or employees who want to end their day at a decent hour.

Long term, this means maintaining the best possible credit scores. Short term, you should put together the most complete documentation possible required for a refinance, including letters of explanation.

See my mortgage checklist and helpful questions to ask at Easy Path to Low Mortgage Payments.

Of course, should the HARP refinance business slow down, you could find banks pursuing you! But in the meanwhile, put together the best package possible and apply for a HARP 2 refi with the most sympathetic and knowledgeable loan originator available.

Best wishes, Kate

P.S. Loan modifications go through existing loan servicers while HARP 2 refis are originated through any participating lender.

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