HARP 2.0 Program Available Soon

On Monday President Obama announced his changes to the Home Affordable Refinance Program or HARP.  This program was created in 2009 to help homeowners refinance their mortgage into lower current market rates.  It was also created so that borrowers could save money on their mortgage payment.  Saving money on a borrowers mortgage would hopefully prevent the borrower from wanting to let their home go into foreclosure because of negative equity.  Also it would help borrower save money and there for putting more money into the economy.  

Heres the problem!

The Government announced the HARP program in 2009. Fannie Mae & Freddie Mac were hoping to refinance 2 - 3 million homes.  The reality 2 years later is they failed.  Big Time.  Only funding about 900,000 HARP loans.  The excitment in 2009 was becuase FANNIE & FREDDIE would allow up to 125% loan to value mortgages.    Most banks & servicing companies took one look at the program and decided to NOT offer this program.  The reason?  Fannie Mae & Freddie Mac put so many warrantees and restrictions on the underwriting requirements that the Banks and Investors that were funding these loans would be required to buy the loans back from fannie or freddie if they made one little mistake durring the underwriting process.  Fannie & Freddie said they would buy these mortgages but, they put so many regulations that it would be easy for them to renig on their agreement.  

The Solution!

On monday when Obama announced the changes to the HARP program the major changes are:

1. It does not matter what your home value is.  A borrower can refinance no matter what their home is worth.
2. Obama is lifting the warrantees and refulations that were put in place.  This way bank will feel more comfortable funding these loans with out worring about having to buy back the loan if for some reason FANNIE or FREDDIE decide they do not like it.
3. The borrower will have an incentive if he or she reduces their mortgage term.  

My Take!

If the HARP program changes are true and if Bankers and Investors feel they can Fund this program without a lot of Risk, this program WILL meet the original goal of 2-3 Million Home Owners.  I have had hundreds of clients over the last 2 years want to refinance but couldn't becasue of their negative equity.  Most of the borrowers that will refinance will have an interest rate range of 5.875% - 6.75%.  All of these borrowers will be able to refinance into current market rates.  The monthly savings for these borrowers will be HUGE.  

How to Qualify!

• Fannie Mae or Freddie Mac have to Own or Insure the current Mortgage.  Click on the link belowto see if either Fannie Mae or Freddie Mac own your home loan
  • Does Fannie Mae Own My Loan?
  • Does Freddie Mac Own My Loan?
• The borrower has to have made their payments ontime for the last 6 months
• The borrower had to have gotten their mortgage prior to June of 2009
• The borrower could not have refinanced already through the HARP program. 

When Can I Refinance? 

Fannie Mae & Freddie Mac announced that the guidelines will be published mid November of 2011.  Mortgage Banks could be rolling out the program by December.  If you are interested in Refinancing  using this new Government HARP program give me a call or send me and email with any questions 530.227.2476.