HARP – Home Affordable Refinance Program Overhaul?
Posted on 12. Sep, 2011 by Scott Schang in HARP
Part of the President’s “Jobs Plan” introduced last week, includes an over haul of HARP, the Home Affordable Refinance Program.
HARP was created to help homeowners that are unable to refinance because they are upside down, and whose mortgages are owned by Fannie Mae or Freddie Mac.
Government loans like FHA, VA & USDA already have streamline programs available.
These streamline programs allow home owners to refinance to current interest rates with little cost or paperwork.
You may be eligible to apply if you meet all of the following:
- Your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac
- You do not have an FHA, VA or USDA loan
- You have to be current on mortgage and no more than 1 x 30 days late in last 12 months
- First mortgage does not exceed 125% of the current value of your home
- Refinance must improve affordability or stability of your mortgage
- You must have the ability to make the new payments
The changes being talked about suggest lifting the current 125% LTV limit. This would certainly help many folks that I talk to daily that are upside down much more than 125%.
Government Programs That Don’t Suck
Ok, I’m going to just say it. Most of these types of programs suck. They are typically created as “guidance” to the banking industry with no requirement that the lenders participate. Those that do play along, often do so inefficiently and inconsistently.
This program speaks directly to home owners that are more than 125% upside down on their home, yet does nothing to address the fact these home owners will still be upside down on the home for years, if not decades to come.
I have conversations with responsible home owners that are tired of seeing all of their new neighbors moving in, and paying far less for their home that what is owed on yours! It’s frustrating..
I don’t care what interest rate you get, that’s a real challenge for many folks today. We need a Government program that doesn’t suck.
We’ll keep a close eye on this program and any other programs being talked about.
If you have an experience, either good or bad, or questions about one of these programs, you may leave a comment below, chat with us live or give us a call.
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13 Responses to “HARP – Home Affordable Refinance Program Overhaul?”
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I am current in my mortgage and my mortgage is more than 125% of the current value of my property. Is there a way to refinance my loan?
Thank you and more power to you.
Hi Violet, Did you run your address through the Fannie Mae and Freddie Mac lookups? As of today, 125% is the maximum. The proposed changes seem to be focusing on lifting that limit, at which point you would have more options.
One other way to refinance if you’re planning to stay in this home is to pay down the principle balance. This is not always a great option, but it is available.
I am keeping a close eye on this program – I will report what I know, when I know it
Hi Violet,
Unfortunately, the current limit on the HARP program is 125% loan to value – the focus of the discussion around the HARP program seems to definitely be focused on this limit. They are talking about raising this limit. Not sure what they are raising it to?
I’m keeping a close eye on this program and will update you when I hear anything!
Isn’t a FHA mortgage owned by Fannie Mae or Freddie Mac?
Hi Barbara,
It’s pretty confusing, but no, FHA does not own Fannie Mae and Freddie Mac, but they are both under the watchful eye of the Federal Government. FHA, VA & USDA all offer streamline programs to help underwater home owners reduce the interest rate on their mortgage with little cost or paperwork.
HARP is the Government’s solution to making this option available to home owners with non-Government insured loans.
Does harp allow you to cash out some of the equity in your home? And how stringent are they on income if you are self-employed? What is required for proof?
Proof of income for self employed requires your most recent 2 years complete tax returns including all schedules. If you file K1, 2 years of those returns will be required as well. Your net taxable income will be averaged over 24 months to determine your qualifying monthly income.
Cash out is not allowed under HARP and can be challenging in this market.
If you are in California, there are some options I would like to look into.
my loan is not owned by either Fannie Mae or Freddie Mac. Any word on whether that requirement will be lifted?
Hey Steve,
Not likely. The only buzz I’m hearing about the program is lifting the maximum LTV requirement – basically allowing homeowners to refinance that are further upside down than the current limitations allow.
Fannie and Freddy are under the conservatorship of the Federal Housing Finance Agency, the Federal Government. The Gov. loan programs already offer streamline programs that allow refinancing even if the home is upside down – and it’s extending these policies to Fannie and Freddie because those loans now fall under the jurisdiction of government oversight.
The challenge is that the Gov cannot force note holders/servicers of non Gov loans to offer these programs – and many of those loan programs caught in the middle here were originally written by lenders that are out of business.
The companies that bought the portfolios of these lenders paid pennies on the dollar for the paper. I guess what I’m saying is there is no incentive for these note holders to work with homeowners because they have so little invested.
This is also the biggest challenge with all of the HARP, HAFA and other Government programs – there’s no teeth in any of these programs. The Government can only financially incentivize or strongly urge lenders to participate – unfortunately, most lenders are ignoring these pleas.
I would recommend contacting your lender directly to see if they offer any sort of streamline or assistance for it’s customers.
I know this isn’t great news, but you never know what’s next – I keep a close eye on these things and will let you know if anything changes.
I bought my home in July 2009. I’m trying to refinance my current mortgage, a calstrs 80/17 loan. It’s a 30 yr fixed at 5.625 on both. What options are available for me? Thanks
Hi Aureliano,
CalSTRS is a very challenging loan to refinance in today’s market for a couple of reasons. Because your second 17% mortgage is deferred and you’re not paying mortgage insurance, any refinance scenario would combine the first and second into one loan and would ultimately require mortgage insurance.
The result is that although it may be possible to combine both loans into a FHA financing loan and reduce your interest rate about 1.5%, you will have to make payments on a loan that is is 97% of the value of your home AND pay monthly mortgage insurance. I know that’s a long explanation but basically what i’m saying is that even though your interest rate will be reduced, your home loan payments will go way up.
I am more than happy to run some numbers and show you what your payments would look like, but I doubt you would like the higher payment.
Hope this helps?
Our mortgage loan is owned by Freddie Mac. Is there a list of lender provider of the DU Refi Plus? I would like to contact them. Thank you very much!
Hi Rose, DU Refi Plus is available, but the HARP enhancements to the program will not be available until March 2012. Currently, only servicers are allowed to manually process Refi Plus with unlimited loan to value. Most any lender would have the ability to offer this program, it really just comes down to how much experience they have processing these loans.
If you are in California, I would love an opportunity to run some numbers for you. We are a direct lender in California and we process DU Refi Plus loans quite often.
Shoot me an email at [email protected] with the best time and number to reach you if like us to take a look at your loan and see what opportunities there may be to lower your rate and payment.