Loan Modification

HARP 2.0 Seems to be Working Better

By David Reed

After fits and starts with a variety of Loan Modification programs with varying degrees of, or lack of, much success, the 2.0 model so far seems to be a good bet to finally address major issues that homeowners underwater on their property can find some relief.  The Homeowners Affordable Refinance Program, or HARP, has been trying to make its way from the government program to the consumer for nearly two years now with limited success.  The original HARP program allowed homeowners who owe more than their home is worth to refinance to the current low fixed rates.  Yet the obstacles held many back.

First, lenders knew that if any material facts were found later to be in fact, wrong, then the lender would have to buy the loan back from Fannie Mae or Freddie Mac.  Lenders can’t be lenders very long if they have to buy back loans they already made.  Lender’s aren’t lenders if they don’t lend.  Another roadblock with the original HARP program was the amount that could be borrowed compared to the current appraised value of the property.  This maximum loan amount was capped at 105% of the appraised value. For a $100,000 home, the loan could be no more than $105,000 for example.  While that helped some folks it didn’t help the vast majority of upside down homeowners in hard-hit states like Florida, Nevada or California.

HARP 2.0 addresses these concerns.  Buy back provisions have been relaxed so lenders are more likely to take the risk and there is no longer a need for an appraisal.  Why the new appraisal component is important is that loan-to-value limitations are essentially removed…you can’t calculate a loan to value percentage without a value, right?

There are restrictions on the HARP 2.0 just as with the previous HARP program but the two most important are that the mortgage must be owned by Fannie or Freddie (you can go to their websites to see if your mortgage is owned by one of them) and that there can be no more than one late payment more than 30 days past the due date in the last 12 months and zero lates in the last six months.

If you have been turned down before on a HARP loan and you still want to refinance your loan, try again.  It just might your time.

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Related posts:

1. Mortgage Modification Sponsored By The Government, What Is Harp
2. Loan Refinance Simple Answers to Important Questions
3. Loan Refinance Simple Answers: Profitable Refinancing and Underwater Loans

1. Mortgage Modification Sponsored By The Government, What Is Harp
2. Loan Refinance Simple Answers to Important Questions
3. Loan Refinance Simple Answers: Profitable Refinancing and Underwater Loans

Full post as published by Blown Mortgage on May 17, 2012 (boomark / email).