New HARP 2 Loan Announcement

by Ask Kate at her Laptop

New October 2013 revised HARP eligibility date! The original HARP 2.0 loan announcement on March 18, 2011 is continuously updated and kept current! Now with friendlier Making Home Affordable HARP guidelines, more homeowners can refinance their underwater mortgages. Yes, even if you owe more than your home is worth or have mortgage insurance!


Important! Don't miss out. The HARP Refinance Program through Making Home Affordable ends on December 31, 2016.

March 2012 HARP 2.0 Loan Introduction

Ask Kate at Get-Your-Best-Mortgage-Rate.com
In 2009, the original Making Home Affordable Refinance Program (HARP) was introduced by the Obama Administration.

It offered the hope of affordable and stable monthly house payments to homeowners with Fannie Mae and Freddie Mac home loans.

Yet its restrictive 125% loan-to-value cutoff for fixed rate mortgages excluded the majority of struggling homeowners.

Why? They owed too much on their mortgages to benefit.

2013 HARP Eligibility Revision

The HARP eligibility date has been revised. It is now based on the date of the promissory note, not when Fannie Mae or Freddie Mac securitized the mortgage.
Announcement Quick Links: Lenders | Property | Credit | Income | Rates | PMI | Initial Eligibility | Borrower Benefit | Ask Kate

Sweeping HARP 2.0 Changes Begin

In October 2011, sweeping changes to the Making Home Affordable Refinance Program were announced by Fannie Mae and Freddie Mac.

But many homeowners have discovered a reluctance among mortgage lenders to offer the new and improved program. There are a couple of reasons...
  • Fannie Mae and Freddie Mac needed time to update their automated underwriting software and guidelines, a massive undertaking.

  • This made it necessary to roll out new guidelines in phases.

  • Some lenders are imposing stricter rules (overlays) to the new guidelines.
Ask Kate about HARP 2.0 Loan
Refinancing got you down? Ask Kate about HARP!

March 2012 Announcement

But the long awaited HARP 2.0 Loan Announcement is here, complete with new benefits!

HARP 2.0 Lender Improvements

1. Lenders' liability has been reduced by eliminating the reasonable ability to repay standards.

Your Benefit: It is easier to get mortgage approval with fewer conditions.

2. Participating lenders and loan servicers do not underwrite from separate sets of guidelines under the automated software. (Only a servicer can manually underwrite refinances.)

Your Benefit: You are not as boxed into using your loan servicer. You are more free to shop participating lenders to compare competitive mortgage rates, closing costs, points, and most loan terms.

HARP 2.0 Property Improvements

3. There are no loan-to-value (LTV) restrictions for fixed rate mortgage refinances up to 30 year terms. Also, there is no combined LTV cutoff for existing 2nd mortgages. (But ARM LTVs are still restricted to 105%.)

Your Benefit: It makes no difference how far underwater your home's value has sunk if you refinance into a 30 year term (or less) with a fixed rate.

4. Streamline appraisal guideline means a property appraisal is no longer a standard requirement. (But cooperatives, manufactured housing, and 2-4 units are not eligible for appraisal waiver.)

Your Benefit: Less cost. Less hassle. Less uncertainty.

5. Guidelines for re-qualifying condominiums are reduced.

Your Benefit: If your neighbor downstairs has quit paying his condominium dues, you could still get approved.

6. Occupancy status includes more than owner-occupied properties. (But at least 2 months reserve savings are required for second homes and 6 months for investment properties.)

Your Benefit: You can HARP refinance your principal residence, second home, and investment rental properties.

7. Type of housing includes more property categories.

Your Benefit: Attached and detached properties, 1 unit and 2-4 units, condominium and cooperatives, and manufactured homes are eligible for consideration.

HARP 2.0 Credit Score Improvements

8. No standard minimum credit score. (But if mortgage payments increase more than 20%, re-qualification with minimum credit score and debt-to-income ratio is necessary under manual underwriting.)

Your Benefit: A low credit score is now much less of a deal breaker. However traditional underwriting guidelines still apply.

9. No specified waiting period for bankruptcy or foreclosure.

Your Benefit: After bankruptcy or foreclosure, there is no specific waiting period imposed. Traditional underwriting guidelines still apply.

10. More relaxed late mortgage payment guidelines.

Your Benefit: 1 late mortgage payment during the previous 12 months is allowed as long as there are none during the immediate 6 months before applying for HARP.

HARP 2.0 Employment, Income, Reserve, Asset Improvements

11. Less documentation and verification of income, reserves, and savings. (But if mortgage payments increase more than 20%, full re-qualification is required under manual underwriting.)

Your Benefit: Less paperwork and hoops to jump through, streamlines re-qualifying.

12. Maximum debt-to-income ratios are not set in stone.

Your Benefit: More borrowers with higher debt ratios will get approved.

HARP 2.0 Interest Rate and Mortgage Closing Cost Improvements

13. Reduced fees from Fannie and Freddie passed through lenders to borrowers, loan-level price adjustments (LLPAs).

Your Benefit: Less refinancing cost. For owner-occupied refinance of 20 year terms or less, there are no LLPA fees. Over 20 year terms, they are capped at .75%. Contrast this to a 2% cap on traditional non-HARP refinances.

14. Individual lenders set their mortgage rates and closing costs. There is no published HARP interest rate.

Your Benefit: You are free to shop mortgage rates and fees just like you would in traditional refinancing. This keeps lenders competitive, saving you money.

HARP 2.0 Mortgage Insurance Improvements

15. It is possible to HARP 2.0 refinance with borrower paid private mortgage insurance (BPMI).

Your Benefit: You are free to refinance with any participating HARP lender even if with BPMI.

16. It is possible to HARP 2.0 refinance with lender paid mortgage insurance (LPMI).

Your Benefit: You are free to refinance with any participating HARP lender even with LPMI.

How Your Lender Determines Initial Eligibility

By the way, did you know your lender's first step is to determine your initial eligibility? If your... ...you are eligible to be considered for the Making Home Affordable Refinance. Congratulations!

*Fannie loans refinanced from March 1, 2009 to May 31, 2009 may qualify for a 2nd refinance.

How Your Lender Determines Borrower Benefit

Secondly, your lender will need to show at least one of the following...
  1. Your monthly house payments will go down

  2. Your mortgage rate will be reduced

  3. Your loan term will be decreased

  4. You will be refinancing into a more stable loan product
...to satisfy the borrower benefit provision.

Ask Kate

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate a new question.

Have you seen my eye-popping directory of New HARP 2.0 refinance questions and answers? You will also find HAMP loan modification, FHA short refinance, FHA streamline refinance, Obama proposed refinance, and more.

Guidelines evolve. I'll update as news breaks. Check my Mortgage Blog often.

Best wishes,

Ask Kate

> > HARP 2 Loan Announcement

Comments for New HARP 2 Loan Announcement.

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HARP Application Deadline: December 31, 2016
by: Ask Kate

Reminder! Don't wait to submit your HARP refinance application before the deadline of December 31, 2016. In most cases, homeowners are not boxed into using their own loan servicer. This means they can choose any participating lender.

Homeowners should also know that HARP does not require a loan to be underwater. Borrowers can have up to 20 percent equity in their homes and still be eligible for HARP.

Kate

Refinancing after a bankruptcy
by: JE from Baton Rouge, LA

Is it possible for us to take advantage of the HARP Program after recently being discharged from a Chapter 13 bankruptcy?

If so, how long should we wait to apply for a refinance?

Hi JE, Kate here...

To date, there is no specific guideline built into the program that restricts HARP refinancing after a bankruptcy. But experience tells us that lenders generally add an overlay of their own which can differ from institution to institution. So, when you interview HARP lenders, ask their individual company policy on bankruptcy.

What are overlays? You can read about them here: HARP 2 Program Guidelines vs Infuriating Lender Overlays.

Read other borrowers' experiences with HARP eligibility after bankruptcy.

Best wishes, Kate

P.S. For conventional programs other than HARP, Fannie and Freddie usually require a minimum 2 year waiting period to get loan approval after chapter 13 bankruptcy discharge and 2 to 4 years after a chapter 7.

Refinancing Again with a HARP Mortgage
by: Tim from Egg Harbor Twp, NJ

I have been in a HARP loan for about 2 years at 4.5 interest rate.... My mortgage payments are up to date. Was wondering if it's possible to refinance again with another HARP loan at a lower interest rate.

Hi Tim, Kate here...

Unfortunately, HARP loan guidelines allow one HARP refinance per property. So if you have used the HARP 1.0 or 2.0 program to refinance a home, you cannot use HARP on that specific property again.

However, if a homeowner owns multiple houses, each property can be considered for one HARP mortgage.

Best wishes, Kate

P.S. Write your elected officials and remind them of their HARP 3.0 proposals before they sweep them under the table. Here is a cheat sheet for who to write: How to Contact Washington DC and Your State Government.

Underwater Mortgage Program That Won't Ruin Our Credit
by: Julia from Deptford, NJ

Hi Kate, We are underwater and wonder if there is a mortgage program that can help us without ruining our credit. We want to lower our APR which is 7.625%. Thanks, Julia

Hi Julia, Kate here...

Try HARP (Home Affordable Refinance Program). This mortgage plan is tailored to underwater borrowers with good credit whereas HAMP (Home Affordable Modification Program) is geared more to distressed homeowners with a hardship.

Review the guidelines for HARP earlier on this page to get familiar with the parameters. In most cases, you have your choice of participating lenders, unlike the HAMP plan which can only be processed through a borrower's loan servicer.

Best wishes, Kate

Debt-to-Income Ratios for HARP Refinancing
by: Pamela from West Virginia

Hi Kate. I would like to know what percentage my debt to income ratio needs to be in order to qualify for a harp mortgage refinance? Thank You

Hi Pamela, Kate here...

Maximum debt ratios are not set in stone by Fannie Mae or Freddie Mac in regards to the HARP program.

However that does not stop individual mortgage lenders from piling on more stringent HARP guidelines.

I wish I could give you a definite answer but there just isn't one. Even so, keep in mind that high debt-to-income ratios are not a end-all to qualifying for a mortgage.

So even if you are concerned, don't hesitate to apply for your HARP refinance. You might get a pleasant surprise.

Best wishes, Kate

Current HARP Interest Rates
by: Maria from Santa Clara County, CA

What is the current HARP rate?

Hi Maria, Kate here...

There is no specific HARP mortgage rate. Lenders are free to price their HARP loans just as they set their own rates for traditional refinances.

This means you are free to shop lenders for the best HARP 2 rates and fees. Learn how to compare Good Faith Estimates here.

Best wishes, Kate

Deceptive Behavior Regarding PMI for HARP Refinance
by: Pennsylvania

I have been working with my credit union on a HARP refinance for my home. This process began in mid October when the rate I was offered was 3.3 with a 3.8% APR. Their policy is you cannot lock in a mortgage rate until the loan processes.

I agreed to the rates and of course they changed. New terms: 3.5% with a 3.97 APR as of November, these were the terms I have been waiting to lock in.

I was able to lock in on Dec 10th, to close on Dec 21st. I locked in and was told I would receive a lock in certificate in my email. I received the certificate and also a revision of terms where, after I locked in, they raised my APR to 4.3% without explanation.

I called to inquire about the increase and was told that it was due to the addition of my PMI. It was acknowledged from the beginning of the loan that PMI was a factor and I was told the payment and company would not change but rather just move loan to loan.

That is quite the increase for the addition of PMI. I am afraid of more surprises at closing. Is this standard for the mortgage industry? What can be done.

Hi, Kate here...

If I understand correctly, your mortgage rate did not go up but the APR did which is reflective of the cost of getting the mortgage, including lender's mortgage insurance, otherwise known as PMI.

Was your PMI originally disclosed in your payment last October? Or was it overlooked, only to be added when you locked your interest rate?

Sadly, when financial institutions take on too many loan applications or do not properly train their employees, big mistakes like this happen. Call a supervisor to discuss the increase in APR and sloppiness in paperwork.

If your complaint is not satisfactorily addressed, you can contact the Pennsylvania Department of Banking and Securities at 1-800-PA-BANKS to file a consumer complaint.

To avoid surprises at closing, request a HUD-1 closing statement a couple of days prior to signing documents and compare to the Good Faith Estimate that reflects your locked-in mortgage rate. This way, you'd have time to consult your mortgage professional without slowing down the funding.

Here's help in understanding a Good Faith Estimate. The numbers on each line correspond to the same numbers which you'll find on your final closing statement, the HUD-1. The numbered lines make it easier to compare figures on the two documents.

Best wishes, Kate

P.S. PMI cannot be added during a HARP refinance if it is not required by the current mortgage terms, regardless of loan-to-value.

Expected Turnaround Time for HARP Loan
by: Erin N from Racine, WI, USA

I started the refinance process with the same lender from the original loan and still am not closed almost 3 months later. I got them all of the information to them in a very timely manner and I am very frustrated with how long this is taking. We originally were supposed to close 10/15/12 and then 10/30 and then 11/20. We have had to pay 2 mortgages at our much higher interest rate due to their delay.

What is the expected turnaround time for a HARP loan? I thought it should only be about 1.5 months since the original closing date was set for 10/15. Is this normal or are they just taking their time so they can keep getting a larger amount out of me?

Who can I file a complaint with? I have tried the president's office and they just send me to someone who never returns my phone calls or emails.

Any help would be much appreciated!!

Hi Erin, Kate here... A delayed mortgage closing is very frustrating and usually due to poor planning on the part of the lender, as evidenced by three missed closing dates.

Be sure to continue providing all necessary paperwork and answering all questions in a timely manner. This way, if your closing goes beyond the interest rate lock-in period, you won't be responsible for paying extension fees.

If you'd like to file a complaint, try calling the Mortgage Banking Section of Wisconsin Department of Financial Institutions at 608-261-7578.

Best wishes, Kate

HARP 2.0 and Lender Paid Mortgage Insurance
by: Glenda

I have been trying to get a HARP 2.0 refi since June of 2012. I have been turned down by 3 lenders because Fannie Mae has deemed me ineligible for HARP 2.0. I have strong credit and income, and no late payments, loan sold to FM prior to 2009, etc.

The last lender (the underwriter) said everything looked great. Until they were advised by Fannie Mae that I was ineligible due to "credit enhancements" placed on the original loan.

I soon found out from my lender that there is LPMI on my loan. I agreed to pay a higher interest rate for what I thought was no mortgage insurance, but was not aware this was considered "lender paid mortgage insurance".

In any event, is there anyone out there with LPMI that has been approved for HARP 2.0? Is there anything I can do, or is this a lost cause?
Thank you.

Hi Glenda, Kate here.

How many homeowners would know ahead of time to ask if no mortgage insurance means lender paid MI! Not many! And why would they?

I'm fairly sure it was in your fine print but we all know borrowers feel rushed at time of signing final loan documents, especially when they are told, "Are you really going to read these disclosures? They are boiler-plate forms, you know."

The good news is that Making Home Affordable changed guidelines in spring of 2012 authorizing homeowners with Lender Paid Mortgage Insurance (LPMI) to participate in the HARP 2.0 refinance program.

The bad news is that insecure lenders resist this LPMI-friendly guideline by adding their own stricter requirements called overlays.

Even worse news is that some mortgage insurance companies seem to be more difficult for lenders to work with.

And you, the homeowner, are caught in the cross-hairs.

Regardless, I have two suggestions. You'll need to know the name of the mortgage insurance company providing the LPMI first.

1) Call the MI company directly and ask which banks they prefer to work with for HARP 2 loans. Then proceed to shop and compare the mortgage lenders, asking my qualifying questions.

2) Or, go start shopping additional lenders. (First poll your friends and relatives by asking which mortgage originators helped them the most.) Request the lenders' track record of refinancing with HARP 2 when there is LPMI when the mortgage insurance company is (fill in the name of your specific provider).

It's possible to do this but it's going to take some elbow grease.

Best wishes, Kate

Can I Use HARP if I am NOT "Underwater"
by: Sam from Orlando, Florida

Hi Kate, We just received our appraisal which came in at $350k. Our loan value at present is $305k, so the value of the house is more than we owe. Can I still use HARP if my mortgage is NOT underwater?

We are getting mixed information in regards to whether we can use HARP. Can we? If we can, is it advantageous for us to go with HARP or just a conventional 30 year fixed. What are the pros and cons.

Thanking you in advance, Sam

Hi Sam, Kate here. A loan-to-value (LTV) must be above 80% to be eligible for HARP. Based on your appraised value, you will be borrowing 87% of your home's value so in this respect, you should meet guidelines. ($304,000 / $350,000 = 87%)

To check for the best deals and compare mortgage rates and fees, get two good faith estimates, one for HARP and the other for traditional refinancing.

If you don't currently pay private mortgage insurance, I think you will find a lower payment with HARP. HARP does not add PMI even when the loan-to-value would traditionally require it, unless the homeowner's mortgage payment already includes mortgage insurance.

But another consideration is that traditional non-HARP refinancing may be a simpler process.


HAMP Struggles with Wells Fargo
by: Anonymous

My loan type is negative amortization for a rental acquired in 2007 through World Savings. Wells Fargo denied modification several times, for having not enough income, for too much income, for having no hardship, etc. Now they are are telling me that I can apply for HAMP? or HAMP 2? Would it be waste of time to try again? I am behind for more than a year. Thanks. SI

Hi SI, Kate here! In spite of your lack of past success, please try again. Don't waste time figuring out if it's HAMP Tier 2 or not. Just get immediately on the phone and call WF.

I announced the 2nd tier of HAMP so previously denied homeowners would know to re-apply. Theoretically, the lender should know which stack to place your second application. (Sorry for a little sarcasm.)

With that in mind, it would not hurt to mention you have applied and been turned down for a HAMP loan modification and are re-applying after hearing of second chances for struggling homeowners.

Very best wishes, Kate

P.S. Let me know of the outcome.

Credit Enhancement
by: Gracie

We were denied a HARP refinance due to a credit enhancement, does HARP 3.0 address this? Or should we try a different lender?

Hi Gracie, Kate here. HARP 3.0 is only in the proposal state. So know one knows, as of June 2012, how the benefits will shake out.

You are free to contact other lenders for a HARP refinance. But have you considered HAMP loan modification? Like HARP, it is one of the Making Home Affordable programs.

Best wishes, Kate

Why are the 'real' HARP rates higher then online?
by: Elizabeth

Kate, Why are the 'real' HARP rates higher then online?

I've been offered by GMAC 4.25 (and the same at Wells and Quicken Loans) but online when I put my information in, I see from 3.7 - 3.9.

-E.

Hi Elizabeth, Kate here. Standard pricing adjustments can occur, for example based on credit scores or loan amount.

But HARP interests rates are no different than pricing for other loan programs. They are set by individual lenders who may allow their loan originators to adjust pricing for more profit.

Ask whoever is handling your refinance process to explain specifically what caused your rate to go up. If you aren't satisfied with the explanation, you can vote with your feet by moving onto another lender.

Choosing a lender is similar to interviewing a prospective employee. What you see at the interview is probably the best behavior. So pay attention to your gut feeling while you shop among lenders.

Good luck and best wishes, Kate

Bad timing for HARP 2
by: Anonymous

Hi Kate, I refinanced in late 2009 intending to continue occupying the property as my primary residence. At the time, property values in my area had fallen but waiting out the recovery seemed plausible.

Then I unexpectedly had to move out of state for work, so I converted the property into a rental (with negative cash flow) thinking I could still wait things out.

Since then, property values have dropped to 60 percent what I owe on the mortgage and of course I'm still losing money on the rental.

I don't want to walk away, but it seems I'm not eligible for any of these loan modification programs because I refinanced after the cutoff date. Any advice?

Hi, Kate here. I was going to recommend HAMP Phase 2 which should be released hopefully in June and will include rentals. Read about it here at HAMP Phase 2 Mortgage Modifications.

But again, existing financing must have been obtained before January 2, 2009. I still recommend watching announcements at my blog in case the eligibility cut-off date changes.

In the meanwhile, ask your loan servicer if they have an in-house loan modification program.

Best wishes, Kate

HARP 2 Help
by: Dave

Kate, do you ever help homeowners get their HARP documents, filings, all other pertinent info to the right people at the right time?

Personally, I would much rather have someone else who knows what they are doing and does this sort of thing for a career handle this.

Sort of the same reason I choose to bring my family to the hospital when they are sick, or hurting.

Hi Dave, Kate here. Thank you! I enjoy comments like this.

In 2006, I originated my last mortgage and transitioned from working one-on-one with borrowers to educating homeowners and home buyers through my website.

Some days I forget that Ask Kate was actually an afterthought! I originally intended to publish my 20 plus years of mortgage lending experience in a guide-format at Get-Your-Best-Mortgage-Rate.com.

My initial goal was to get the know-how in my brain onto the web, making it available to more people. But after letters started pouring in, Ask Kate became the focal point of my efforts.

I'm truly inspired by the letters and feel honored by the opportunity to empower homeowners.

You can read the events leading up to my website here. And although I can't take you up on your offer, thank you again for your confidence. It means a lot to me.

Kate

Home Value for Private Mortgage Insurance
by: Homeowner

Where does the original home value come from, for the PMI insurance?

Hi, Kate here. The original home value is based on the appraisal in the existing loan file in possession of the loan servicer.

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