Widely anticipated changes to the Home Affordable Refinance Program (HARP) were announced this morning. The updates include several but not all of the changes most borrowers have been hoping for. Among the changes are the following:
1. There is no longer a 125% loan to value limit to the program. Going forward HARP loans can theoretically work for any loan backed by Fannie Mae or Freddie Mac regardless of how underwater the home is.
2. A full appraisal will not be required in all cases. Reports are that in some cases an automatic valuation system may be used.
3. Mortgage insurance providers have reportedly agreed to automatically transfer mortgage insurance coverage to the new loan. If this is true it will be a huge change because previously borrowers with mortgage insurance were not able to participate in the HARP program.
Unfortunately, the cut off dates for eligibility were not changed so any loans taken out after May of 2009 are still not eligible for the program.
The FHFA said the operational details for the program will be available by November 15th 2011. That probably means that the new program won’t be up and running with most authorized lenders until December. The question yet to be answered is how many authorized lenders will choose to participate in the new version of the program in the months to come. But assuming several authorized lenders do participate there is no denying that removing the 125% limit and the allowing borrowers with mortgage insurance to participate will open the program to vastly more borrowers.
Contact us in the sidebar to learn more about the HARP program and other government-backed refinance programs that are available.
November 4th, 2011 at 10:19 am
Just this morning I called Wells Fargo to see if they would do anything about modifiying our loan. OUr home was assessed at less than half it original purchase price back in 2007. Apparently we are at about 150% of loan to value. SO they said no can do. I’m hoping that if I understand this correctly, that restriction is going to be lifted. I’m not clear about one thing, our mortgage is held by Wells Fargo and I believe it was a conventional loan, not FMae or Fmac..so does that preclude us from taking advantage of this new twist on the HARP modification?
[Admin response: Unfortunately yes. The new HARP refinance program only applies to conventional loans that are already backed by Fannie or Freddie. If you have a conventional loan that is not backed by Fannie/Freddie and are underwater your best bet is probably to seek a loan modification with your current lender.]
November 9th, 2011 at 11:56 am
I had the same question as Paul Kaminer, posted 11/4/2011, but in addition to his question, no where on my loan docs does it say who my loan is backed by, My mortgage is with CitiMortgage, how do I find out the company that “backed my loan?”
November 9th, 2011 at 2:13 pm
Our Fannie Mae loan secured in Dec. 2007 is with Bank of America and we are about $12K underwater. I contacted them to get a modification and was told BOA cannot help us because we are current with our mortgage payments. I was advised that unless we default there is nothing they can do. They left me a voice mail message saying this just this AM so I would say the supposedly new rules are not in effect yet.
December 28th, 2011 at 1:53 pm
Nicole and Paul,
Even though you’re both in a conventional loan, it could still possibly be owned by Freddie Mac or Fannie Mae and you wouldn’t know it until you looked it up. If you google Freddie Mac or Fannie Mae Loan Lookup, you will find a place to enter in your information to see if your loan is owned by either of them.
February 20th, 2012 at 2:52 pm
I closed on our lone in June of 2009 so we are just a few weeks beyond the May 2009 cutoff. Has there been any indication that this date might be moved forward at all?
February 21st, 2012 at 12:45 am
Based on stipulation #2., (2. A full appraisal will not be required in all cases. Reports are that in some cases an automatic valuation system may be used.), How does one know if they need an appraisal or not?