Questions About Mortgage Relief Through The Obama Administration’s Home Affordable Refinance Program. HARP has been expanded to help more underwater borrowers to qualify for a refinance their mortgage and obtain a lower rate or shorter term, even those with little or no equity.
HARP 2.0 offers both lenders and consumers an easier set of eligibility requirements to help streamline the process and encourage more participation. The questions and answers below may help you better understand how this program can help you.
What does it mean to be upside down on my mortgage?
The terms “Upside Down” or “Underwater” simply mean that you owe more on your home loan than your property may appraise or sell for. The percentage that you are upside down is factored into what’s called a Loan-to-Value (LTV) ratio.
So, if you owe $125,000 on a property that is valued at $100,000, then your LTV would be 125%….. Read More
What Is The Difference Between A Refinance And A Loan Modification?
Basically, a modification is a change to an existing loan, where a refinance is a new loan. To further explain the difference between the two, a refinance on your loan means that you get a new loan to pay off an existing mortgage.
A modification is for borrowers who are behind on their mortgage payment, or are struggling to remain current, and are either not eligible for a refinance or it will not help them maintain their payment….. Read More
What Changes Were Made To HARP That May Make Me Eligible Now?
There were several changes to HARP, but the primary enhancement removed the limit on the amount that homeowners could be underwater (owe more on their mortgage than their home is worth).
With that change, many homeowners who were not eligible will now qualify. The amount a borrower owes on a mortgage compared to the appraised value of a property is called Loan-to-Value (LTV)….. Read More
Is HARP The Only Refinance Program Available For Underwater Homeowners ?
Only mortgages owned or guaranteed by either Fannie Mae or Freddie Mac are eligible for refinance under the enhanced and expanded provisions of HARP. You can confirm that your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:
There are other government mortgage programs and help for borrowers who are not eligible for HARP. FHA, VA, USDA all have their own version of no-appraisal refinance and mortgage assistance. MakingHomeAffordable.gov has a list of options and support numbers if you do not fit the HARP eligibilty requirements.
Who Is Fannie Mae?
Fannie Mae is a government-chartered company with a mission to provide a stable source of funding to the U.S. housing and mortgage markets.
The company purchases and securitizes mortgage loans to ensure that money is consistently available to financial institutions that lend money to home buyers….. Read More
What Is The Difference Between A Lender And A Servicer?
Your mortgage lender is the financial institution that gave you your mortgage loan. Your servicer is the financial institution that you send your monthly payment to.
Your servicer is responsible for collecting your payments and crediting your account. You can find your mortgage servicer contact information on your monthly statement or coupon book.
On The Fannie Mae Loan Lookup Tool, What Does “Match Found” Mean?
A “Match Found” response to your search in the Fannie Mae Loan Lookup means that Fannie Mae owns a loan at the address entered in the search.
However, it does not guarantee or imply that you will qualify for a Fannie Mae loan refinance or loan modification.
My Loan Is Owned By Fannie, But It Says That I Don’t Qualify For HARP?
There are several reasons as to why a person may not be eligible for HARP even though they have a Fannie Mae owned loan.
One of the reasons why a person may not be eligible may be due to the fact that the loan wasn’t sold to Fannie Mae the day of or before May 31, 2009….. Read More
Does Fannie Mae Own My First And Second Mortgage?
Fannie Mae generally owns primary (first-lien) mortgages only. A “Match Found” on the Fannie Mae Loan Lookup Tool means that they own the primary mortgage on the address entered in the search field.
*To find out who owns your second mortgage, refer to your monthly mortgage statement or contact the mortgage servicer to whom you send your monthly payment to.
Will The Lender Require An Appraisal With A New HARP Loan?
Maybe – Even though the new updates to this program are intended to give borrowers with a Loan-to-Value (LTV) ratio above 125% the ability to refinance, lenders will still run an online valuation or require a full appraisal.
Fannie Mae and Freddie Mac are updating their systems as this program progresses, but a good rule-of-thumb to follow is that loans under 125% LTV will generally not have an appraisal ….. Read More
Do I Have To Refinance Through My Current Lender?
No – As of March 19, 2012, Fannie Mae and Freddie Mac have opened this program up to non-servicing mortgage lenders.
This is a huge benefit to borrowers in the fact that you have an opportunity to find a bank or mortgage broker who specializes in the new HARP program and can offer competitive rates.
Am I Eligible For A Refinance If My Current Loan Has Mortgage Insurance (MI)?
Yes, and the good news is that most of the mortgage insurance companies are working with HARP lenders to make the process as seamless as possible.
Your new lender will do the work to make sure your current mortgage insurance scenario is similar to what you were, or were not paying.
Will I Have To Pay MI With HARP Since My New LTV Will Be 80%?
No – If you did not originally have mortgage insurance due to the fact that your original LTV was less than 80% when acquired that loan, you may not be required to have MI, even though your new Loan-to-Value ratio will be greater than 80%.
I Did Not Put 20% Down When I Purchased My Property, But I Do Not Have MI?
If your current loan at the time of closing was over 80% and you are not paying a monthly mortgage insurance, most likely you have a Lender Paid Mortgage Insurance (LPMI).
And yes, you would be able to refinance if you have an LPMI. Your lender will simply need to transfer the same coverage level from your current MI company to the new HARP 2.0 Refinance.
Can I Combine My First And Second Mortgage Into The New HARP Refinance?
No – HARP does not allow for cash-out refinances or combining a first and second.
Your new lender will order a subordination from your current second mortgage holder, which may require a fee.
To quote the guidelines: “The refinance will not have a cash-out component, except for closing costs and certain de minimis allowances to cover items such as association fees, property tax bills, insurance costs, and rounding adjustments.
Will The Lender Need To Verify Income, Assets, And Employment?
Fannie Mae doesn’t expressly ask for Income, Employment or Asset verification for HARP 2.0 Loans.
However, Fannie Mae suggests that the lender must obtain a verbal verification of employment (VOE) and verify the borrower’s source of non-employment income, plus obtain any other income documentation as required by the Underwriting Findings Report….. Read More
Can I Qualify For A New Loan On An Investment Property Or Second Home?
All occupancy types i.e. Primary Residence, Second Homes and Investment Properties are allowed with HARP, even if the occupancy type has changed since the time of the original loan.
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Are All Borrowers On The Existing Mortgage Required To Be On The New Loan?
Borrower(s) may be removed through the new transaction, provided that:
a) The lender obtains documented evidence that the remaining borrower has been making payments from his or her own funds for the past 12 months, and
b) The borrower(s) being removed is also removed from the deed.
*If the borrower(s) is being removed due to death, however, evidence that the remaining borrower(s) has been making payments from his or her own funds is not required.
Can My Lender Force Me Into An Escrow Account If We Don’t Have One?
Yes, however it isn’t the lender who is forcing you to establish an escrow account on your new HARP loan, it is actually a requirement by the government for the program.