HARP 2.0 Allows More Homeowners to Refinance

April 20, 2012 - PRLog -- Help is here for underwater homeowners who are not facing foreclosure, but would like to refinance to today’s low interest rates. Homeowners who are currently unable to refinance because of a drop in home value are the prime candidates for the next wave of the Home Affordable Refinance Program (HARP), known to industry insiders as HARP 2.0.

“Finally, there’s a program available for responsible people who played by the rules,” said Geoff Allison of Blue Skye Lending.

Announced by President Obama on October 24, 2011, the new guidelines were released by the Federal Housing Finance Agency (FHFA) in November 2011, and the program was expanded in March 2012 when the new changes were coded into the automated underwriting systems.

To qualify for HARP 2.0, your loan must be held by Fannie Mae or Freddie Mac, you must be current on your mortgage payments and you must have a stable income history. However, “lender participation is voluntary,” said Joe Adamaitis of Academy Mortgage. “All HARP loans are subject to lender requirements.”

Here are the HARP 2.0 changes at a glance:
•   Fannie Mae or Freddie Mac must own or back your loan and must have done so on or before May 31, 2009.
•   You can have one 30-day late payment in the past 12 months, as long as it did not take place in the last six months.
•   HARP 2.0 removes the 125% loan-to-value cap for fixed rate mortgages. (However, adjustable rate mortgages must have a maximum loan to value of 105%.)
•   The appraisal process has been streamlined; an appraisal may not even be required.
•   You do not qualify if your loan was previously refinanced under HARP, unless it is a Fannie Mae loan that was refinanced between March and May of 2009.
•   There is no credit score requirement to qualify for a HARP mortgage. However, most lenders do require a minimum credit score.
•   Your HARP loan could be approved even if you recently filed bankruptcy or experienced a foreclosure.
•   You can now refinance your second home and investment property under HARP.
•   If you are refinancing your condo, the new HARP guidelines no longer require that less than 10% of units in the complex be owned by one person and that no more than 20% of owners in the complex be behind on their association dues.

For the Lender

The new HARP guidelines make it easier for lenders to refinance more loans. Lenders will no longer have to show that borrowers have a reasonable ability to pay, unless the loan payment increases by 20% or more. This applies only to refinancing that borrowers do with their current lenders.

HARP 2.0 limits the lender’s liability, eliminating most of the lender representations and warranties on the original loan, which could have required a lender to repurchase the loan if it were found to be defective. Additionally, Fannie and Freddie have reduced the fees they charge lenders for high loan-to-value loans. This is passed on to the homeowner, making the loan cheaper, with even greater savings on the 15-year and 20-year loans.

The lender must show that the homeowner is benefiting from the new loan – by either reducing the size of the monthly payment, reducing the interest rate, reducing the amortization term or changing to a more stable loan (fixed rate vs. adjustable rate loan).

While HARP 2.0 does make it easier for lenders to refinance more loans, it’s not necessarily a cake walk, according to members of the Mortgage Alliance. “I’ve heard of homeowners who went through the entire process, only to be denied at the last minute,” said Joseph Knight of Gulf Coast Mortgages of Southwest Florida. “That’s one reason why it’s so important to use an independent non-bank mortgage professional who can find the right loan for you.”

HARP applies only to borrowers who have Fannie, Freddie or other government sponsored loans. However, in late January 2012, President Obama proposed a similar plan for non-government sponsored home loans.

The HARP program ends December 31, 2013.

To determine if you qualify for a HARP 2.0 loan, or if you would like more information, please contact Joseph Knight of Gulf Coast Mortgages of Southwest Florida and mention this article. Telephone: (941) 378-1356. Email: gulfcoastmortgages@comcast.net.

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The Mortgage Alliance of Southwest Florida is an alliance of independent non-bank mortgage professionals who offer and promote leadership, local knowledge, high professional and ethical standards, and a customer-focused approach to mortgage lending.

Contact Information:
The Mortgage Alliance of Southwest Florida
c/o Blue Skye Lending
8130 Lakewood Main Street, Suite 205
Lakewood Ranch, FL 34202