Senator introduces bill to expand HARP Refinance program

HARP refinance in MNSenate bill S.1375, the “Rebuilding American Homeownership Act” has been introduced by Senator Jeff Merkley, D-OR to try and expand the existing HARP (Home Affordable Refinance Program”.

This has been called by many as “HARP 3“, and is designed to allow loans not currently owned by Fannie Mae of Freddie Mac to be refinanced through the HARP program.

Under the current HARP underwater refinance program, in order to qualify, your existing mortgage loan must be owned by Fannie Mae or Freddie Mac.

If passed, the bill would force Fannie Mae and Freddie Mac to refinance non-Fannie Mae or Freddie Mac loans, and to price in the additional risk into the interest rate so that the program would not cost taxpayers anything.

DO I QUALIFY FOR HARP?

Merley was quoted as saying the “It shouldn’t matter which financial institution owns a loan…” and that “all responsible homeowners should have the option to refinance and save money.”

Merkley also introduced another bill that would encourage people to refinance into loans terms of less than 20-years, which builds equity faster, by paying $1,000 of underwater homeowners closing costs.

Previous attempts at a HARP 3 program, or modifying the current HARP 2 program have not gain much traction in Washington, and these two new bills have no other sponsors.


HARP Refinance still going strong in MN and WI

The Federal Housing Finance Agency (FHFA) special underwater refinance program, commonly known as HARP (Home Affordable Refinance Program) is still going strong.

HARP refinance in MNWhile mortgage rates have risen a bit, there are still millions of people who could take advantage of the program to save significant money on their monthly mortgage payments.  Because of this, the FHFA had Fannie Mae and Freddie Mac extend the HARP program by two years to December 31, 2015. The program was originally set to expire December 31, 2013.
More than 2.2 million homeowners have already refinanced through HARP since HARP was introduced by FHFA and the U.S. Department of the Treasury in April 2009.  HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage.Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and taxpayers.
In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to explore their options and utilize HARP before the program ends.

To be eligible for a HARP refinance homeowners must meet the following criteria:

  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80 percent.
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one
  • late payment in the last 12 months.

Check here to see if your loan is owned by Fannie Mae or Freddie Mac


HARP Refinance program extended to 2015

underwaterMinneapolis, MN:  The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to extend the Home Affordable Refinance Program (HARP 2.0) by two years. The program was to expire at the end of 2013, but will NOW expire December 31, 2015.

The program is being extended so more underwater homeowners can benefit from refinancing to today’s low mortgage interest rates.  Already, some 2 million plus homeowners have successfully refinanced their homes using the HARP 2 refinance program.

FHHA also announced they will be launching a nationwide campaign to inform homeowners about HARP refinances, and eligibility requirements.

LEARN MORE about the HARP Refinance Program

To be eligible for a HARP refinance homeowners must meet the following basic criteria:

  1. The loan must be owned or guaranteed by Fannie Mae or Freddie Mac (Check and see for free)
  2. The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  3. The current loan-to-value (LTV) ratio must be greater than 80 percent.
  4. The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months.

If your current loan is an FHA Loan, or a VA Loan, you also have refinance options if your home is underwater with a FHA Streamline Refinance, or a VA IRRRL Streamline Refinance.

 


HARP 3 on the horizon?

Minneapolis, MN: As anticipated, Democratic Sens. Robert Menendez, NJ, and Barbara Boxer, CA, this week reintroduced a bill that could spur more refinances.

underwaterThe Responsible Homeowner Refinancing Act, (AKA HARP 3) among other things, has a stated goal of relaxing requirements for borrowers to refinance and would extend the Home Affordable Refinance Program (HARP) for an extra year through 2014.  It is currently set to expire December 31, 2013.

Currently, the HARP Refinance program only allows people who have a loan owned by Fannie Mae or Freddie Mac to refinance an underwater home.  HARP 3 would allow ALL underwater homes to be refinanced.

Stay tuned for more details.

 


Can a HARP refinance help you?

Can a HARP refinance help you?

Minneapolis, MN:  A HARP refinance, in short, allows you to refinance with expanded eligibility requirements in regards to loan-to-value, or debt-to-income. That could mean that you are allowed to refinance, even though your home may have lost value., or the payment is a bit higher than normally allowed for your income. That flexibility allows many homeowners to refinance when they otherwise would not be able to. The idea is that even though the new loan might be a risky loan compared to other loans files with lower ratios it is still less risky than just leaving the home owner in their current position. Fannie Mae or Freddie Mac is on the hook for your loan if it’s a HARP refinance, so they want to allow you to get a lower payment and be in a position where you are less likely to default on your mortgage.

What do I mean exactly by expanded eligibility?

Well, Fannie Mae and Freddie Mac have what we call Automated Underwriting Systems. Fannie Mae and Freddie Mac each have their own system and they have certain thresholds that are known in the industry. For instance, we know that a total debt ratio of 45% is a very important number. Why? Normally, if your total debt ratio is over 45% then you are denied. On new loans, these systems will both issue approvals up to a 50% total debt ratio but if you are over 45% you need to have what we call “compensating factors” to get approval. With a HARP loan this 45% number is basically thrown out the window and the Automated Underwriting Systems are much more flexible with their approvals.

Loan to value ratio is also very important in any loan transaction. The normal rules are if the property is your primary residence then you can have as little as 3.5% equity and you can refinance. If the property is a rental then you’ll need 25% equity to get a refinance.  HARP allows you to be significantly underwater and still get the loan done. That means instead of having to have equity in the property you can have a property that is worth less than what you owe and still refinance.

MY LENDER said NO to HARP

Understand this important fact, Fannie Mae and Freddie Mac do NOT do loans. They BUY loans from lenders. Not all lenders feel the same about the risk to them about doing HARP refinances. Most lenders are very conservative today.  Keep in mind that lenders can have “overlays” to the basic HARP guidelines that restrict what that company decides to refinance. You don’t have to go through your current lender to get a HARP 2.0 refinance done.  Shop around to find the best HARP mortgage interest rate just like you would with any other refinance. And good luck!

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com