By Toni Ryan, First Priority Financial
New guidelines for the Home Affordable Refinance Program (HARP) were released by Fannie Mae and Freddie Mac on November 15th, 2011. The goal of expanding HARP is to allow borrowers who are upside-down on their homes or who have little equity to refinance at today's low interest rates. The hope is that this will both stabilize the housing market and boost the overall economy, by putting extra dollars in the pockets of consumers who are likely to spend them. Not everyone who is underwater will qualify for HARP 2.0. Below is a summary of the basic requirements:
1. The loan must be owned or guaranteed by Fannie Mae or Freddie Mac (See how to find who owns your loan below)
2. The loan was sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
3. The loan was not refinanced under HARP previously, unless it is a Fannie Mae loan that was refinanced under HARP from March through May, 2009.
4. The loan's current loan-to-value (LTV) is greater than 80%.
There are several changes to the HARP program that give the program greater accessibility to more borrowers As long as your new HARP monthly payment is not more than 20% greater than your current payment, specific credit and income guidelines do not apply. The lender will have to determine that the borrower is an “acceptable credit risk” (and what that means is yet to be determined). A HARP lender can approve a loan that has one late mortgage payment in past 12 months, as long as it did not take place in the last six months. Your HARP loan could be approved, regardless of how recently a borrower filed bankruptcy or experienced a foreclosure. HARP loans are no longer restricted only to owner-occupants.
Although applications may be submitted for new HARP 2.0 mortgages now, many lenders believe the bulk of HARP mortgages will not be approved until March, 2012. Both Fannie and Freddie must update their automated loan underwriting/approval software by March, 2012. Until then, lenders may approve HARP mortgages by manually underwriting the loans.
To see if you qualify for a lower rate - check the following websites to see who owns your loan: www.FannieMae.com/loanlookup and www.FreddieMac.com/mymortgage Take control - Call your mortgage professional for further details.