Ask The Loan Man

HARP 2.0 – Will that help me?

A lot of people can’t refinance because they owe more than their house is worth or they have a 2nd mortgage or Mortgage Insurance (MI) and we have solutions for many of those issues. There are several programs here now or coming but let’s start with the HARP which stands for Home Affordable Refinance Program.

What is HARP 2.0?    

Everyone is talking about HARP 2.0 and so let’s define it. First of all, since it is 2.0 that means that the program was already around and we are talking about changes so let’s show you what it looks like now and then discuss changes that are sort of in effect now and really in effect after March 19th 2012 when the new changes will be coded into the automated underwriting systems so we can actually approve these loans.

The first thing that you need to know is that this is only for people who have a mortgage already owned by Freddie Mac or Fannie Mae. People tell me all the time that their mortgage is owned by a big bank but if you have a 30 year fixed rate mortgage and it is not interest only, it is probably owned by Freddie or Fannie and I will show you how to find out a little later. Currently you can refinance your home even up to 125% Loan To Value (LTV) and there are different rules and pricing at different levels (95%, 105% etc.). Currently it is a little more difficult if you have a 2nd mortgage or MI. This is what HARP 2.0 is looking to fix.

The first part is easy, they have removed the LTV issue altogether. There will definitely be approvals where we do not need an appraisal but there will also be instances where appraisals will be required but in all instances, any LTV can be approved. Next, it is getting easier to keep a 2nd mortgage or HELOC in place while refinancing the first mortgage and we will be able to accommodate many loans with MI. There is another enhancement that limits the fees on these loans and the qualifying ratios will most likely be relaxed. My suggestion is to look online and see if your loan fits and if it does, gest started with your favorite lender. Start by going to  www.FreddieMac.com/mymortgage/ and/or www.FannieMae.com/loanlookup/  to see. Loan applications can be taken in mid February 2012 but may not be able to be fully approved until March 19th if you need the new rules. This program makes sense because they already own these loans and so giving people lower payments makes them more stable so everyone wins.

What if I don’t have a Freddie or Fannie Loan?

On the flip side, you can see why if Fannie or Freddie does not own your loan currently they may not be too excited to take on a new loan of $250,000 on a home that is worth only $200,000 but there may be hope for these people as well. There is talk of using FHA to help these folks even if they do not have a current FHA loan. I think this will probably come true but I do not know how long it will take or what the rules will look like so stay tuned.

Anything special if I have an FHA or VA or USDA loan?

One more note is that if you currently have an FHA, USDA or VA loan, you can get a streamline loan without an appraisal and with relaxed qualifying guidelines. We do not use debt ratios at all and we weigh heavily on whether the house payment has been made on time in the last 12 months. This program has been around for the entire 22 years I have been in business so the model is strong.

Please send me your real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.

Hans Bruhner is a branch manager for First Priority Financial. Hans is licensed by the CA DRE # 01085398 and NMLS #243484 and First priority is licensed by the CA DRE # 00652852 and NMLS #3257. If you have a question, please contact him at (707) 347-9250 or hans@hansblog.com

March 22, 2012 by · 2 Comments

About Hans

My goal is to give you the information so that you can make an informed decision on your next mortgage. If I can help you directly on a California mortgage that would be nice as well.

Comments

2 Responses to “HARP 2.0 – Will that help me?”
  1. Jackie Lipiec says:

    Trying to get some info for my son who owns a home in Albuquerque, NM purchased 41/2 years ago. Current loan is held by Citimortgage, 30yr fixed at 6.1%. He owes around $125,000 but says people he has talked to say he can’t refi due to Zillow appraisal being about $10,000 less. He is 25yrs old and has been at his current job for about a year and half. He is pretty good about paying his bills but his credit rating is in not great (550+) since he was laid off two years ago and was out of work for four months. Then the following year he was rear-ended by a drunk driver and again was off work 3-4 months due to injuries. He has never defaulted on his mortgage. I know you might not be able to help him directly since he is out of state but was wondering if you could direct us to some programs or give us pointers on how best to proceed. He is not looking to take out any money just to get a better interest rate and lower his monthly payment.
    I read your columns in the Gazette and thought you might be able to help. Let me know if you have any questions. Thank you for your time. Jackie

    • Hans Bruhner says:

      On the HARP 2.0 program, the fact that the house is worth about $10,000 less than what is owed is not an issue (that is if we believe Zillow). The credit score of 550 will stop us in our tracks as we need a minimum of 620 to get this loan approved.

      The fact that it is being serviced by CitiMortgage does not tell us if Fannie Mae or Freddie Mac own the loan ultimately and you can check that at the links above. Anyone can see if their loan is owned by Fannie Mae or Freddie Mac by checking at the links above.

      CA has a program which will pay someone’s mortgage for 9 months if they are unemployed and I do not know if AZ has a similar program or not. He could also look into modifying the loan with Citimortgage under the HAMP program and he would have to deal with Citi directly on that program. I know some great lenders in AZ who could look at his credit and help him get back on track and raise his score as well. Just call or email me.

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