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Harp 2.0, We Answer Confused Homeowners Questions

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HARP 2 Refinancing

Harp 2.0 has confused homeowners seeking refinancing which have led to the outpour of question from our readers.  Below are some of the answers to the common questions our readers were asking about HARP 2.0 and refinancing.

Am I required to refinance with the same lender I did my original loan?
Under HARP 2.0, you’re not required to refinance your mortgage with the same lender who’s currently servicing it.
Smaller lenders seem to be more willing than some of the larger ones to do HARP refinances on mortgages they did not originate. Mortgage brokers, who work with multiple lenders, have it easier in helping you identify other lenders who may be willing to take on your loan.

Can you refinance an investment property or a second home under HARP 2

Yes you can use the HARP 2 program to refinance underwater or low-equity mortgage on either a second home or an investment property of 1-4 units, as well as on your primary residence.

Why only Fannie and Freddie mortgages qualify for HARP 2.0
HARP 2.0 is limited to Fannie and Freddie loans  because both companies fell in government receivership during the market crash. Because of this the government can tell them what rules to follow when refinancing mortgages. Since HARP 2.0 is run through Fannie and Freddie, it can’t be used to refinance mortgages backed by strictly private lenders.

Can you qualify for Harp 2.0 if you have a VA or FHA loan?
Sorry, not under Harp 2. But there is help if you have a VA or FHA loan, you may be able to do a streamline refinance without an appraisal.

How do I know if I qualify for the HARP 2.0 loan?
There are many factors but here are some basics: If you’re loan is currently owned by Fannie Mae or Freddie Mac (we are not talking who you pay your loan to) , the loan was originated before May of 2009, you’ve made your last 12 mortgage payments on time with maybe just 1 30 day late payment and can verify your income, you should qualify. You most likely will not need an appraisal because the program has no limit to the loan to value or combines loan to value.

For HARP 2.0 what documents are needed?
It’s a full doc loan. Tax returns, W2’s, bank statements, pay stubs, etc.

Do you have to have good credit for HARP 2.0 loan?
Credit is checked but they are mainly concerned with the last 12 months of mortgage payments

What fees are associated with HARP 2.0?
Nothing extra to you except that the rates will be slightly higher than “normal” loans.

Can you qualify for HARP 2.0 if you are in an arm?
Yes

What are the consumer benefits of HARP 2.0 for consumer?
Cheaper mortgage payments!

If you are unemployed do can qualify for HARP 2.0?
No

Can Harp 2.0 loan be for people who are not underwater?
Yes, again, speak to a qualified mortgage broker that can determine the best route for your situation.

Is Wells Fargo and other major banks starting Harp 2.0 now?
You do not have to go back to your current mortgage provider (Wells, BofA, etc.). In fact, they may be the hardest place to go to since they are a big bureaucracy. Contact a mortgage broker who will evaluate your situation and put you in the best program. They will be with you every step of the way


When will HARP 2.0 Expire?
HARP is presently set to expire after Dec. 31, 2013.  For more information, visit the Fannie Mae or Freddie Mac web sites at www.Fanniemae.com or www.Freddiemac.com.

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As a Homeowner How Do I Know If I Qualify for HARP 2 Refinancing?

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Harp 2 Refinancing QualificationsThere are new guidelines being released to qualify for HARP 2.
YES.  And more people will qualify for HARP program than ever before.
YES. The question remains…  “Will I qualify HARP 2?”
Here is how you can begin to know….


Step 1:
Who Owns My Loan?

You need to know if your loan is owned by either Fannie Mae (FNMA) or Freddie Mac (FHLMC).
It is not something you will know off the top of your head.  You must check the websites below AND call your lender to ask, “Who OWNS my loan?”  You are trying to find out who the investor is.  This is a different party in many cases from the company that collects your payments (the servicer).  Enter the information into each of the forms through the links below and also call your current servicer unless you get a “yes, match found” answer.

http://www.fanniemae.com/loanlookup/
https://ww3.freddiemac.com/corporate/

Step 2:
What if Fannie and Freddie Don’t Own My Loan?

If, at some point, you get a YES answer to either of these questions:  “Does Fannie Mae own my loan?”  or “Does Freddie Mac own my loan?”then you can proceed to step 3.

If you are getting a NO answer to the above questions you need to continue to try both links repeatedly (as FNMA and FHLMC both acquire loans) AND you need to call your lender. A NO answer generated from the forms on these links does NOT necessarily indicate that your loan is NOT owned by either of these entities.  Just entering information differently (IE misspelling, typos, abbreviations or missing information) from how it is in the lender’s system can produce a NO answer…

If you get a NO you will still want to consult with an experienced broker who works with many different lenders and can ascertain whether or not there is another program available to you. There ARE other programs available that do not involve either of these entities.  There are also potentially ways that you can improve your own situation to qualify for a refinance (IE paying down the loan, getting a second job, paying off debt, getting a “gift” from family, etc.).  If you get a NO you can also ask your current lender if they participate in the federal Making Home Affordable Program.

A definitive NO here is the end of the road for a HARP refinance for the time being but be sure to keep in touch with those sites and with an experienced lender to determine if something has changed.  If one thing is for sure, things change!  It has happened again and again over the last half decade as these programs have rolled out.

Step 3:
If you discover YES My Loan is Owned by Fannie Mae or Freddie Mac

Your loan IS owned by Fannie Mae or Freddie Mac.  Now what?!
You will potentially qualify under one of the following programs:

FNMA: DU REFI PLUS OR REFI PLUS

FHLMC: FREDDIE MAC RELIEF (I or II) OR FREDDIE MAC RELIEF OPEN ACCESS (I or II).

The difference between the “OR” programs above relies on who the servicer of the loan is.  One program is only available to the servicer of the current loan (sometimes through a broker) and the other is available to any lender who offers the loan product.  Some servicers do not exist any longer and some do not offer the specific program a borrower might need or the guidelines needed to qualify.  This is where it can get dicey and an experienced lender is necessary to help you determine where your loan qualifications might fit it.  And NO Lender is omnipotent so NEGU (never ever give up).

The first answer is TALK to an experienced lender, maybe even more than one.  Each bank offers a DIFFERENT VERSION of this product, therefore going to one bank, with one set of guidelines, may not be your solution.  One bank will still only go to 105% of the current home value with your loan balance, while another bank will go to 125% of the current property value.  If you have a second mortgage, that changes what you qualify for, as well.  Again, some banks will go higher on the COMBINED loan to value (meaning the balance now including the second mortgage loan balance versus the current propert value).  I must also add:  there are situations where I refer a client back to their original lender because the guidelines and/or the pricing might be better but I would definitely prefer to talk through the situation with the client FIRST to determine what makes the most sense for their particular situation.  Most borrower wants to talk to their servicer AND a trustworthy and experienced broker.  Sometimes a servicer will have different guidelines for their borrowers with loans already with them versus loans that are owned by a different lender as well.  Try to be sure you have an experienced loan officer with the servicer as well.  Not all loan officers are equal in terms of experience and knowledge and talking to the wrong person can get you the wrong answer as well.

I am seeing pricing and guidelines vary GREATLY from one lender to another.  Just because Fannie or Freddie “release” new guidelines does not mean that any specific lender will offer the program just as they release it.  Lenders have overlays, rules in addition to the guidelines, that will sometimes limit what is available through their bank.

AND, just because your loan is owned by Fannie Mae or Freddie Mac does not mean you qualify otherwise.

You will need to meet some other qualifications:

For example, your loan has to have been originated before 6/1/2009 if it is owned by Freddie Mac.  You can only take advantage of the program one time.  And your overall credit risk profile will still have to qualify through the electronic processing system as well.  It sounds like this system may “relax” sometime in March.

My recommendation is to talk to your lender now and get your HARP 2 refinancing application going.  When (and if) the flood gates do open on HARP 2 program, you want to be ready to go.

Remember, persistence is KEY when it comes to getting refinancing especially under HARP!  As is the EFFORT to keep trying!  AND, when you find a solution, do not wait for something better to come along.  SNATCH IT UP as fast as you can!

Author

Sheila Goulart- Siegel
President and Senior Loan Consultant
Synergy Financial Group
(949) 388-9254 ext. 101
(949) 388-9372 fax
DRE license #:    01247838
NMLS license #:  239691

HARP 2, Help For Homeowners Who Are Underwater: Interview with CEO Fred Glick of U S Loans Mortgage LLC, U S Spaces, Inc & and on the Board of Directors of NAIHP.org

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Recently we had the opportunity to talk to Fred Glick about Harp 2 and underwater home owners it will benefit.Harp 2

Few would dispute that Fred takes it on himself to be one of the leaders in fighting and lobbying for a more ethical mortgage and real estate industries.

A seasoned mortgage and real estate professional he manages a commanding position in the industry and has been on CNBC, NPR and has been quoted in numerous publications, voicing his views at the White House and Congress to see positive change in the industry and push out the unethical brokers who have shady practices.

He recently with others helped bring forth HARP 2. A mortgage loan where homeowners that are underwater who could not refinance before will benefit.

JL: With HARP 2 now in place what developments do you see ahead in the housing industry?
FG: With people’s ability to refinance homes instead of having them go to foreclosure, people will stay in their neighborhood, spend money locally and make their communities better so prices can stabilize or go up.

JL: Analysts and Regulators are saying they expect 1 million more refinances then would have closed under HARP, with an average loan balance of $150,00 to $175,00 do you agree with this?
FG: Hard to say but if properly marketed, that could be a good number

JL : Does the consumer need to worry about deadlines to refinance under HARP 2 ?
FG Yes. They must do it by the end of 2012. Rates are ridiculously low now so why wait. Also, I am sure people are paying very high rates that will be eligible for these loans because they have to have been originated before May 2009.

JL: Lenders have been fond of adding fees to HARP loans called by Fannie and Freddie “loan level price adjustments” which where averaging 2%. I hear under HARP 2 the fees are reduced to 0% on loans 20 years or fewer, and 0.75% for mortgages for more than 20 years and for ARMs
FG: That is correct. That makes the rates not too high.

JL: Daily Properties readers have probably read one of many of the stories reporting on mortgage brokers and mortgage companies’ fraudulently adding extra fees to loans, how a consumer can tell if the fees added to their loan are fair and not illegal.
FG: In the beginning of their transaction, there is a good faith estimate. Brokers and lenders are locked into those fees.

JL: What if a loan is not owned by Freddie or Fannie?
FG: As of right now, there are no programs but the President has just announced generically, a program he wants to start. Details will follow. But, if you have an FHA loan, you can possibly get what is called a streamline loan to lower your rate.

JL: Will people who defaulted on their mortgage be able to get help under HARP 2?
FG: No. You must be perfect in your payment for the last 6 months and have had no more than one 30-day late in the last 6 months.

JL: Is there any other information consumer should know about HARP 2?
FG: You do not need to go back to your current servicer. If your loan is with Wells Fargo, Bank of America, Chase, Citibank, etc., you are not required to go to them. As a matter of fact, it might be harder since they have call centers with registered but not licensed people handling your loan.

To ask Fred Glick further questions on Harp 2 please email him at Fred(AT)FredGlickDOTcom

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