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
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
| 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.
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
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...
- Your monthly house payments will go down
- Your mortgage rate will be reduced
- Your loan term will be decreased
- You will be refinancing into a more stable loan product
...to satisfy the borrower benefit provision.
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