Unique New HARP 2 Refinance Plan Questions

by Karen in Gilbert, Tom in Olympia, and more

Ask Kate receives unique and new HARP 2 refinance plan questions! Just when I thought I'd heard every question regarding HARP, I received these 3 questions. How would you handle your lender insisting your loan has lender paid mortgage insurance even though you can prove otherwise? Can you get a HARP refinance without being destitute?



Ask Kate continues: Can you refinance with HARP after a short sale on another property? Here are my answers based on new HARP 2.0 guidelines...

Lender Paid Mortgage Insurance (LPMI) HARP Dilemma

by Karen H. from Gilbert, Arizona

Hi Kate, Your website is wonderful. I just read your HARP 2 information regarding LPMI.

However today, I received conflicting information. I have had a Freddie Mac loan for 11 years. In 2007, I had the PMI removed after meeting the 20% requirement. (This lowered my payment by $60 each month.)

I have tried to refinance this loan since 2009 but am underwater. Knowing that HARP 2 was being implemented, I called again today. However, my bank won't refinance my loan because it still thinks it has lender paid MI.

I had the mortgage statements faxed to me showing the PMI was removed in 2007, I don't understand. What do I do now? Please help me, I feel like I am going in circles. Thanks, Karen H.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate: Hi Karen, The banks are swamped and some are cherry picking the easiest Home Affordable Refinance Program applications to process.

1. My guess is that someone glanced at a past record of your loan, saw it was originated with Lender Paid Mortgage Insurance (LPMI) and looked no further.

2. I have heard rumors of large mortgage companies hiring non-experienced originators to handle the onslaught of HARP 2.0 applications.

So taking that into consideration, your challenge will be to get someone to pick up your fax and read the proof that your LPMI has been removed.

But hey! They should be able to refinance your mortgage, even if it had LPMI! Go to New HARP 2.0 Loan Announcement for more information on HARP 2.0 and mortgage insurance.

Can I qualify for a HARP refinance with $30,000 in the bank?

by Tom from Olympia

Hi Kate, We refinanced to a 30 year fixed 4.5% loan 3 years ago. Can I qualify for the HARP program if I have $30,000 in the bank?

What sort of interest rate can I get? Will they reduce my mortgage? Will it make a difference if I go to a 20 year loan? My mortgage is owned by Fannie Mae (or so I was told).

Ask Kate for HARP 2.0 loan refinance help
Ask Kate: Hi Tom, Do not confuse HARP with HAMP, a loan modification by Making Home Affordable to prevent foreclosure. HAMP eligibility requires a homeowner to document 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.

Think of HARP as traditional refinancing without having equity in your home. For instance, the lenders set their own interest rates and mortgage closing costs. Showing a savings pattern and having reserves in the bank is an asset, no pun intended.

Refinancing to a 20 year fixed rate mortgage term will eliminate specific fees. Read about this here: Eliminate Fees with 20 Year HARP Refinance Terms.

Then go to Does Fannie Mae or Freddie Mac Own My Mortgage to double-check what the lender told you!

Can I HARP refinance after a short sale on another property?

by Anonymous

Kate, I sold a property in a short sale a little over 2 years ago. My current home is financed with a loan owned by Freddie Mac. I am being told by various people that I have to wait 4 years after the short sale to refinance.

Is this true? Will I be able to refinance under the terms of HARP 2? I can't find any information online to prove or disprove the information I am being told.

Ask Kate Empowering Homeowners - Your Home Your Mortgage
Ask Kate: Although not specifically short sale, I can offer scenarios regarding HARP 2.0 guidelines after loan modification, late mortgage payments, and foreclosure or bankruptcy.

After a HAMP mortgage loan modification through Making Home Affordable, borrowers could still be considered for HARP 2.0 if they meet:

1. Initial eligibility requirements

2. Payment history guidelines

3. Borrower benefit requirements and

4. The hardship leading up to the modification is resolved.

Here are guidelines for borrowers with a bankruptcy or foreclosure in their past.

Discuss these specifically with your HARP loan originator.

Best refinancing wishes to all,

Ask Kate

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Failed HARP Refinance due to Freddie Mac Credit Enhancements
by: Frank from Fairfield, Ohio

Kate, My lender is allowing existing 30 and 15 year Fixed Rate Mortgage borrowers to participate in HARP but not existing Balloon or ARM borrowers?

I currently have a Balloon mortgage due to mature in January, 2015. When my loan servicer sold my loan to Freddie Mac, my mortgage was tagged with Credit Enhancements. According to Freddie Mac guidelines, this limits me to Same Servicer for refinancing with HARP.

My servicer told me if I had a 30yr Fixed Rate Mortgage they would do a HARP refinance for me, but since I have Balloon Mortgage they will not help me until it matures. They said its an internal decision not to offer the HARP to Balloon or ARM type borrowers. I feel this is unfair in that they are helping one group of borrowers but not another.

The only solution they offered to me was to take a loan from my 401K account and pay down my 1st to an acceptable LTV for a refinance. That would amount to almost $30k and would put my financial future in risk.

We have great credit, never been late on a payment, etc.

I have researched the HAMP but I am really not interested in a modification, mainly because I don't know much about it.

Do you know of a work around for me or whom I could file a complaint with? Or suggestions on what to do? I could save $200 a month if they would do the HARP for me.

Hi Frank, Kate here. I just finished a tutorial on the Good Faith Estimate form from HUD that all lenders are required to use. Interestingly, the last blurb on the form is this.
If your loan is sold in the future: Some lenders may sell your loan after settlement. Any fees lenders receive in the future cannot change the loan you receive or the charges you paid at settlement.
But I vigorously disagree that selling a loan is innocuous. I am sure you do also since Credit Enhancements were added after closing.

The term of Credit Enhancements sounds innocent. But it could mean your loan did not require income documentation due to the strength of your credit profile but after being sold, was erroneously viewed as the piranha of mortgages, the No Verifier loan. Or it could be that you could have Lender Paid Mortgage Insurance (LPMI).

If you find that you were assigned LPMI without proper disclosure, you may want to consider contacting an attorney to discuss your rights under the Home Owners Protection Act of 1998.

You can also write your elected officials in Congress and in Ohio to report the ill-effects of Credit Enhancements. Look up your Ohio.gov website to contact the official who governs the financial institutions.

Lastly, if you are interested in reading more about HAMP, go to HAMP Loan Modification Information.

Best wishes for your refinance prospects, Kate

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