HARP 2.0 Program- Why Some Lenders Aren't Playing Fairly

April 6, 2012 - PRLog -- Larger banks like JP Morgan Chase and Bank of America are choosing to only offer HARP loans to existing clients. Originating lenders have a financial liability known as a "recapture clause" or a buy back period that can last up to two years from the time when the loan was originated. Any mortgage defaults that occur during this time must be repurchased by the originating bank resulting in hefty fees, financial loss, increased insurance premiums and surety bonds. Under the HARP 2.0 Program, lenders are absolved of liability by servicing existing clients because inhouse refinances are basically modifications on seasoned loans that are out of the critical recapture time frame.

Banks are exercising their power to arbitrarily charge higher rates in order to make massive profits. A duplex or a high rise condo can command higher rates when designated as high risk properties. Both may incur substantial damage through no fault of the owner, such as a fire that spreads from one unit of a duplex to the other, or flooding from a higher level to the units below. Even though the administration limited the maximum spread (margin profit built in the rate) to .75% on a 30 year fixed mortgage; banks are offering higher rates that satisfy their internal guidelines based on  property types, credit scores and loan to value amounts.

Underwater homeowners are wise to submit an application to a broker who can effectively comparison shop while pulling a credit report only one time.  While many banks have their own criteria  under the HARP 2.0 Program, there are other lenders that will gladly assist underwater homeowners. Digging up a bit of extra paperwork like the last two years of income documentation, may well be worth the additional savings.  Homeowners are not limited to their current lenders and can may get more help with a broker as opposed to a lender, "yesterday my client was offered 5.125% through BofA, 5.25% through Wells Fargo, 5.375% through Suntrust and we finally found him a rate of 4.375%" says Lisa Oliveri of online brokerage firm harp-refi.us.

The banks’ participation in the HARP 2.0 Program is voluntary, and as such they can continue to impose their own restrictions. Homeowners can learn about more about the HARP 2.0 Program by visiting http://www.harp-refinance-info.com.

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