HARP- Home Affordable Refinance Program (Explainer)

Who does it affect?
9 Million Homeowners currently in Fannie Mae or Freddie Mac loans

 

Benefits
1. First Mortgage loan amounts up to 125% of your homes current appraised value with and without a second mortgage already attached to your home.
2. “Reduced” qualifying criteria including one times 30 or one times 60 days late on your mortgage in the last 12 months (depending on Fannie or Freddie)
3. Primary Residences, Second Homes and Investment properties qualify.
4. No limits on number of property currently owned
5. Unlimited Total Loan amounts (First and second mortgage combined) assuming second mortgage holder will agree to remain in second position. This is also known as “Subordinating” the new first mortgage
6. Closing cost and as many as two payments can be rolled into the loan
7. Up to $2,000 can be taken out of the mortgage typically supporting debt consolidation.

 

Restrictions
1. Loan must currently be insured by Fannie Mae or Freddie Mac
2. Loans currently with Mortgage Insurance (PMI), Lender Paid Mortgage Insurance (LPMI) and loans not insured by Fannie Mae or Freddie Mac are not eligible
3. Conforming loan amounts only (In Georgia this is $417,000 and below)

 

*Freddie Mac had previously not allowed a borrower to use the HARP with any lender outside of the current provider. On June 5th, they revised this to more closely align with Fannie Mae. However going to a new lender will likely mean going through underwriting again, according to a Freddie Mac press release.

 

Obstacles
1. Extended underwriting
2. Pricing adjustments may apply for homes with limited or no equity.
3. Resistance from second lien holders to subordinate loans.
4. Erroneous reports that rates are going to drop lower and therefore causing consumers to delay taking advantage of this opportunity.
5. Since this program began in June 2009, rates have risen approximately .500%.
6. Continued depreciation in home values

Article guidelines written by Jeff Fee on WSTV's money link on their website and permission has been granted for use by Chris Tanner with Vertical Mortgage