About Government Refinance and Home Purchase Programs

The new FHA streamline program for borrowers who currently have FHA loans more than three years old is starting in just a few weeks. As we have noted in the past, this new program is dramatically more beneficial to borrowers than the previous FHA streamline program because the upfront FHA fee will be waived and the monthly FHA mortgage insurance will no longer be doubling.

As if the launch of this new FHA program weren’t enough good news, add to that the fact that mortgage interest rates on FHA loans are testing all time lows recently. We are hearing of qualified borrowers with excellent credit locking in rates as low as 3.75% on new 30 year fixed FHA loans this week in anticipation of closing in mid June after the new program launches. (Note: rates on FHA loans are lower than rates on HARP loans right now.) If you know of anyone with an FHA mortgage that they got prior to May of 2009 — no matter how upside down/underwater it may be — have them contact us in the sidebar right away. We don’t anticipate this current dip in mortgage interest rates will last long.

We have been getting some questions on what to expect on interest rates for HARP 2.0 loans. The simple answer is that as of May 2012 rates on HARP 2 loans have reportedly been mostly in the mid to high 4’s. Here are some more details:

– If your 1st mortgage is less than 125% of the current value of the home you can get a HARP 1.0 rate. Those rates have been a bit lower than HARP 2.0 loans. HARP 1.0 rates have reportedly been mostly in the mid to low 4s this month.

– Don’t expect rates at 4% or less for a 30 year fixed HARP loan. HARP loans, while subsidized by Fannie or Freddie, are still high risk loans because they by definition are for homes with little or no equity. As a result 30 year fixed HARP loan rates are not the extremely low teaser rates banks love to advertise to lure customers in.

– Freddie HARP loans tend to have higher rates than Fannie HARP loans. Authorized lenders nearly universally report that Freddie is more difficult to work with than Fannie and thus investor demand for Freddie loans is lower than for Fannie loans. The end result is that rates on Freddie HARP loans are routinely as much a .25% higher than rates on similar Fannie HARP loans.

– Rates on non-owner-occupied HARP loans tend to be higher than rates for owner occupied properties.

– The rate and fee hits for lower credit scores are surprisingly minimal on HARP 2.0 loans. In other words people with less than optimal credit can often get the same HARP 2 rates as people with great credit scores.

We’ll post on more quirks and details of Fannie vs Freddie HARP loans soon. But in the meantime contact us in the sidebar to have us look at your specific situation. If you look like a good candidate for a HARP loan we can connect you with an authorized lender who can get you an quote on a HARP loan.

With so few banks fully participating in the HARP 2.0 program we are getting reports that the authorized lenders who are participating are beginning to experience delays in underwriting because of high demand for the program. Sources within participating banks tell us that underwriters who used to be able to complete a review of a file a few days after submission are now sometimes taking a couple of weeks to even get to files because of the volume being submitted. They expect the wait times to get longer an longer in the months to come as more borrowers become aware of the newly rolled out program.

We expect a similar underwriting traffic jam for FHA streamlines in June when the new FHA streamline program begins.

If you have a conventional loan backed by Fannie or Freddie and are interested in the HARP 2.0 program or if you have an FHA loan and are interested in the new FHA streamline program contact us in the sidebar right away to be connected with a participating authorized lender. The sooner you can start the process the better because as awareness of the program increases so will underwriting turn times.

As we have noted here recently the HARP 2.0 program is now up and running. A few authorized lenders are fully embracing the new program but most lenders/banks are either ignoring HARP 2.0 or only partially implementing it. (Contact us in the sidebar to be connected with an authorized lender that is fully implementing HARP 2.0).

As the HARP 2.0 program has gotten under way it has become evident that borrowers who currently have Fannie Mae loans have been getting appraisal waivers more often than borrowers who have Freddie Mac loans. The way the process works is the authorized bank inputs the loan details in the the Fannie or Freddie preliminary underwriting software and that software comes back with results, including preliminary approvals or denials and results on whether appraisals will be required or not. Early reports from participating lenders indicate that the Fannie Mae software has been waiving the appraisal more often than not. The Freddie Mac underwriting software has been much more likely to require an appraisal as part of the refinance process. There are rumors that the Freddie software will be getting an update and it will be easier to get an appraisal waiver with Freddie loans soon too but time will tell.

Of course in the end the appraisal is mostly an inconvenience because the HARP 2.0 program when fully implemented allows for refinances no matter how low the appraisal comes in. Still, avoiding the appraisal makes the refinance process go faster and saves borrowers a few hundreds dollars up front.

If you have an conventional loan backed by Fannie Mae or Freddie Mac (see here to check) and would like to learn more about the HARP 2.0 program or to be connected with a fully participating authorized lender/bank contact us in the sidebar.

The new FHA streamline program that was recently announced is set to go live in just over a month. Homeowners who got their current FHA loan prior to May of 2009 are eligible. The new program allows borrowers to replace their existing FHA loan with a new FHA loan at the current low interest rates without increasing monthly PMI, without adding any money to the loan balance, and without any closing costs. The FHA will start accepting these new streamline loans after June 11, 2012 but borrowers can begin the application process now in anticipation of the new program. If you have an FHA loan that is three years old or older contact us in the sidebar to learn more about this excellent new program.

While most authorized lenders are still not fully participating in the HARP 2.0 program, a small but growing number of them on our list are. The early returns indicate that it remains easier to get a HARP 2.0 loan for Fannie Mae loans than for Freddie Mac loans. The same holds true for appraisals — the Fannie underwriting software is more likely to allow an appraisal waiver than the Freddie underwriting software. Nevertheless the program is fully operational now for both Fannie and Freddie conventional mortgages. The HARP 2.0 program is allowing refinances for underwater home mortgages regardless of loan to value ratios and it is allowing mortgage insurance to transfer. Those two things were not allowed with HARP 1.0.

Contact us in the sidebar today if you have a conventional mortgage that was originated prior to May of 2009. Odds are pretty good that your mortgage will be invested in behind the scenes by either Fannie or Freddie and if it is you could be a good candidate to significantly reduce your interest rate and monthly payments through the new HARP 2.0 program.

In early April of 2012 the FHA will be dramatically increasing their upfront and monthly mortgage insurance premiums. These increases will affect all new FHA purchase loans, conventional-to-FHA refinances, and refinances from one FHA loan to another FHA loan (called FHA streamlines) when the current FHA loan is less than three years old. If you have an FHA loan that you got after April of 2009 contact us right away in the sidebar to look into dramatically reducing your interest rate through the FHA streamline program before the new higher fees kick in. After April 9, 2012 it will be virtually impossible to streamline an FHA loans that is less than three years old.

For FHA loans that are more than three years old there is a new program that was just announced that is extremely beneficial. It allows FHA streamlines of those older FHA loans at virtually no costs and without increasing mortgage insurance fees. While the April 9 deadline on FHA streamlines does not apply to FHA loans that are from April of 2009 or older, contact us in the sidebar if you have one of these older FHA loans as well to learn more about that terrific new program that was just announced.

Fannie Mae and Freddie Mac officially began accepting HARP 2.0 loans this week. On the ground just a handful of authorized lenders have begun testing the waters with the new program. Some lenders are allowing refinances above the 125% loan to value. Other lenders are allowing mortgage insurance to transfer for the first time. But the reality is that the adoption of HARP 2.0 is tentative at best so far. The general trend early on is that borrowers with conventional loans backed backed by Fannie Mae will have more luck than borrower with conventional loans backed by Freddie Mac. The hope is that over time more and more lenders will more aggressively adopt the new program but only time will tell. Contact us in the sidebar to learn more about the HARP 2.0 program or the other government-backed refinance programs that are available.

President Obama had some terrific news this morning pertaining to Americans who currently have FHA loans. FHA loans that were originated prior to June of 2009 will now be allowed to streamline to a much lower interest rates WITHOUT adding a large upfront FHA mortgage insurance fee and without increasing the monthly mortgage insurance fee. This means that streamlining your FHA loan should be an absolute no-brainer if you are in that pre-June-09 category. Contact us in the sidebar now to learn more about this new FHA streamline program.

For FHA loans originated after May 2009 the options are more limited and the clock appears to be ticking. The FHA is planning on significantly increasing its mortgage insurance fees on all FHA loans originated after April 9, 2012. So if you have an FHA loan at a rate of 5% or higher that you got after May of 2009 contact us in the sidebar ASAP as well to see if you can streamline to a better rate before the pending FHA mip rate increase this April.

Note: If you don’t have an FHA loan there are programs available for borrowers with conventional loans or VA loans as well.

As has been predicted recently the FHA is poised to raise their upfront and monthly mortgage insurance fees once again starting on April 1, 2012. For FHA home purchases and for refinances from non-FHA loans into FHA loans the monthly mortgage insurance fee will go up by 10 bps (annualized) and the one-time up front mortgage insurance premium will jump from 1% of the loan amount to 1.75%.

The good news is that refinancing from one FHA loan to a better FHA loan through the FHA streamline program will reportedly not be subject to these new increased fees. That will be a major help to borrowers in FHA loans already.

If you have an FHA loan now at more than a 5% interest rate contact us in the sidebar to learn more about the FHA streamline program. With the streamline program borrowers can refinance to a much lower interest rate without having to pay the standard closing costs, get an appraisal, or even provide detailed income paperwork in most cases. The FHA’s logic is that if a borrower can avoid 30 day late payments and maintain a credit score of more than 640 at the higher interest rate, the borrower can do so even more easily at a lower interest rate. Contact us in the sidebar to learn more about this and the other available government-backed refinance programs.

In a speech given in Orlando today an official with the Federal Housing Administration indicated that the FHA is planning to increase its monthly mortgage insurance fees again. We get this from a recent HousingWire story on the topic:

The Federal Housing Administration will announce additional premium changes to its mortgage business and streamlined refinance programs in the coming days.

FHA Acting Commissioner Carol Galante said in a speech at the Mortgage Bankers Association servicing conference in Orlando, Fla., Wednesday that the changes are on their way.

As part of the payroll tax extension agreed to last fall, the FHA will raise premiums on its forward mortgages by 10 basis points and by 25 bps for jumbo loans.

If you have an FHA mortgage with an interest rate of 5% or higher contact us in the sidebar to learn more about the FHA streamline program. With rates on 30 year fixed loans sometimes as low as the high threes in recent weeks now is an excellent time to look into the FHA streamline program. The FHA streamline program lets responsible borrowers who have FHA loans now replace their current 30 year fixed FHA loan with a new 30 year fixed FHA loan at a much lower interest rate without requiring an appraisal or income verification. So with FHA streamlines it doesn’t matter how underwater the borrower is. But the monthly mortgage insurance premium already significantly increased for FHA loans last year and if it gets much higher it will be harder to streamline.

Contact us in the sidebar to learn more about this program and the other government-backed refinance programs available.

In an address in Fall Church, VA this morning President Obama fleshed out some of his new plan to help more Americans take advantage of the record low rates we are currently experiencing. The plan reportedly will lean heavily on the FHA and is designed to reduce barriers for folks who are not able to take advantage of the government-backed refinance programs already in place.

The major kink in the new plan is that the Republican controlled congress must approve it and the $5-10 billion price tag that comes along with it. Odds of that happening don’t seem high.

Even so, there are several very useful government-backed refinance programs that are already up and running well, including the FHA streamline program, the HARP program, and the VA IRRRL program. Contact us in the the sidebar to learn which programs might assist your family.