Your Unique HARP Underwater Refinancing Scenario

by Leslie in Phoenix, by Anthony in California, and more...

Ask Kate to discuss your unique HARP underwater refinancing scenario: Leslie in Phoenix asks about refinancing with the HARP program after mortgage foreclosure. Another homeowner is trying to refinance her home after the death of her husband. The problem? She's not on the underwater mortgage. Anthony wants to know about a HAMP modification following a HARP refinance. He also asks about re-affirming a mortgage after bankruptcy.


Q 1: HARP Refinancing After Mortgage Foreclosure

By Leslie in Phoenix

Kate, We live in Arizona and had more than one property when the housing crashed.

We were foreclosed on a home and we still have a second home that is interest-only and can go up.

It's probably underwater, but not totally sure because it's in the forest, so hard to get an accurate appraisal guess.

We would love to refinance but can't because of the foreclosure in March 2012. Can we still do a HARP and take advantage of a lower rate?

Thank you.

***zz-portrait-left.shtml*** Ask Kate answers: HARP Refinancing After Mortgage Foreclosure

Hi Leslie,

I know you understand I can't tell you whether or not you will qualify for HARP. There are many factors that need to fit together, like pieces to a puzzle. Besides, only a lender is qualified to answer that question.

HARP 2 Guidelines

However, I can discuss guidelines and offer you some tips for working within a dysfunctional mortgage system!

The HARP 2 version of Making Home Affordable's underwater refinancing program includes several significant changes - Relaxed late mortgage payment guidelines allowing 1 late house payment during the previous 12 months as long as there are none during the immediate 6 months before applying for HARP.

Additionally, there is no minimum credit score. Regardless, this doesn't mean a lender is going to receive you with open arms, no questions asked, after a foreclosure.

Have a Discussion with Your Loan Originator

Here are some questions you should be prepared to answer. Discussing your answers will help you get a feel for the experience level of the loan rep and the willingness to go the extra mile on your behalf.

1. Was the foreclosed home your principal residence?
2. Is the home you'd like to refinance owner-occupied or a rental property?
3. Were you ever late on this home's mortgage payments?
4. Have you solved the problem that was responsible for causing the foreclosure?

80% Loan-to-Values and HARP Refinances

You should also know that your house does not have to be underwater to take advantage of HARP refinancing. But your loan-to-value cannot be less than 80%.

Go here for more details: Easy to Read HARP 2.0 Guidelines Summarized. But promise me this! Don't try to self-diagnosis your qualifications. Apply soon while the mortgage rates are so low.

Best wishes,


Q 2: Refinancing through HARP When I'm Not on the Mortgage

Kate, I am trying to refinance through the HARP program. The problem is that the mortgage is in my husband's name only. He is deceased, the mortgage is current, and my credit is fine. My income is around $30,000, with funds to supplement the income. I am hitting road blocks. One said I was Fannie Mae approved but that my loan application needs to be manually underwritten. Any advice?

***zz-portrait-left.shtml*** Ask Kate answers: Refinancing through HARP When I'm Not on the Mortgage

Your situation is certainly not what I'd call cookie-cutter. I doubt this scenario is going to be found in a Fannie Mae manual either!

But in spite of the challenge of not being on the mortgage, there are a couple of ways to hopefully make your loan process go more smoothly.

Pay Attention to Details During Your Loan Process

First off, start with the obvious. Include your deceased husband's death certificate in your paperwork to eliminate any doubt.

Secondly, offer verification of your income. Assuming you were responsible for the payments since his death, demonstrate this with cancelled checks or bank statements.

Thirdly, include bank statements (all pages) for your savings accounts. The more accounts the better.

Then write a letter explaining why your husband was the only one on the mortgage before his death, how long you've lived in the house, and how long you have been responsible for the house payments.

Of course if the home was left to you in a will, include that also.

As far as manual underwriting, this is not something to lose sleep over. But it does mean your choice of lenders has been eliminated. Your loan servicer will be your only option for originating a manually underwritten HARP refinance.

But before you assume your HARP refinance can only be handled by your existing loan servicer, call a few mortgage companies and ask if they have experience with a situation like yours.

Go here for more help: Mortgage Refinancing Tips for Adding Co-Borrowers.

Best wishes,


Q 3: If I Use HARP 2.0 Can I Still Use HAMP - Refinancing After Bankruptcy

By by Anthony in California

Hi Kate, So much information - I'm on overload and am having trouble finding my answer. IndyMac (OWB) has offered me a HARP refi at 4.75%. But it requires impounds for taxes/insurance. So my payment will drop a whole 50 bucks.

My question is, I don't want to do this if it completely negates my ability to try and get a modification, both on my first and second. Both loans are through IndyMac, and I know my chances of getting a modification are pretty slim from what I've seen on the internet.

I can't really go anywhere else because I had to file Chapter 7 a few years ago, which also concerns me, since signing a new refi would basically reaffirm my first, yeah?

I hope you can answer this from soon.

***zz-portrait-left.shtml*** Ask Kate answers: If I Use HARP 2.0 Can I Still Use HAMP - Refinancing After Bankruptcy

Hi Anthony,

I'm hearing a few things in your letter. You had a bankruptcy and are worried about re-affirming your mortgage if you refinance. Please read more about this here: Mortgage Re-affirmation after Bankruptcy.

Secondly, keep in mind while including property taxes in your payments may appear to negate the monthly savings, you won't be getting an annual tax bill from the county. In like manner, your insurance premium will be paid out of your monthly payments.

I'm not sure though why you are hoping to follow a HARP refinance with the HAMP program. If a loan modification is your preference, why not bypass HARP and go straight to your loan servicer to modify your mortgage?

Read more here: Making Home Affordable's HAMP Tier 2 Modification Program.

Best wishes,



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Will HARP Allow Me to File for Foreclosure Later
by: Alina from Florida

If I refinance my loan through HARP, can I later apply for a Short Sale or Foreclosure if at some point I cannot pay for the property? Would using HARP hurt me if I file for foreclosure in this property or another property in the future?

I am getting ready to close on a HARP loan for an investment property, and would appreciate your answer ASAP.

Hi Alina, Kate here...

I am not aware of a HARP guideline as you describe. But the only way to actually know is to review your personalized final HARP closing documents. If you are still unsure, an attorney may be able to assist you with a more definitive answer.

Best wishes, Kate

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