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November 15th, 2011

Fannie, Freddie release HARP 2.0 details

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It happened much later in the day than anticipated, but both Fannie Mae and Freddie Mac have released the details to HARP 2.0.

While both documents are meant for lenders, and thus are rather technical, we’ve just begun to dig out the specifics, and will have more details on HARP 2.0 as they become available.

Here are the enhanced portions of HARP 2.0 and what they mean to you (these details are for those borrowers with an LTV ratio of 80 percent or higher and are refinancing through their same lender): 

Your lender will no longer need to guarantee to Fannie and Freddie that your original mortgage met all its eligibility requirements. 

What does this mean? This means that lenders will be more willing to refinance your loan since they will not be held liable for any errors in your old mortgage loan.

HARP 2.0: Your five steps to approval

You will be required to prove that at least one borrower has a source of income and that it is verified.

What does this mean? This will make it easier to qualify if you used to be a two-income family and you are now a one-income family. Typically, all borrowers on the mortgage will need to show income documents.

You can have one thirty-day late payment on your mortgage in the past year, but none in the last six months.

 What does this mean? If you have been scrambling to make ends meet and have had some late payments in the last year, you should take all steps available to get your payments in on time so as not to lose eligibility.

The lender will no longer be allowed to use the original mortgage as a basis for valuing your property today, and only a proprietary Automated Valuation Model (Home Value Explorer) can be used to value the property.

What does this mean? The old values under which you got your mortgage are thrown out the window, so it doesn’t matter what your home used to be worth. For the purposes of making your new mortgage, no appraisal will be performed, except a reference against the market no more than 120 days old. This should streamline processing times and save you money.

Add-on fees will be chopped. If your mortgage has a loan-to-value ratio of more than 80 percent, and if you can qualify for a new fixed rate mortgage with a term of 20 years or less, there will be no add-on “risk” adjustments. For fixed rate loans with terms longer than 20 years, the total fees will be only 0.75 percent. These fees were as high as 2.75 percent.

What does this mean? The reduction in fees means that your out of pocket costs will be less, or that adding them into the interest rate will still leave you with rates that are attractive enough to consider refinancing. Previously, they might have added as much as a full percentage point to the interest rate.

Qualifications–do you qualify?

HARP 2.0 will now run though December 31, 2013, and applications under the new guidelines can be accepted by lenders starting on December 1, 2011.

You are eligible for HARP 2.0 if:

- Your loan is owned or guaranteed by Fannie Mae or Freddie Mac

- The mortgage was sold to Fannie or Freddie prior to May 31, 2009

- The mortgage has not already been refinanced under HARP, unless it was refinanced under HARP between March and May 2009

- Your loan-to-value (LT) ratio is above 80 percent

-You haven’t been late with a mortgage payment in the last six months and have no more than one late payment in the past year

HSH.com VP Keith Gumbinger contributed to this post

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24 Responses to “Fannie, Freddie release HARP 2.0 details”

  1. Andrew B. Says: November 16th, 2011 at 11:03 am

    Hi Tim,

    Thanks for the info. I’ve been trying to figure out why they still left the May 31, 2009 date as a requirement. If they truly wanted to open this up to as many people as possibly when set this requirement. I, for example, qualify for everything except for the fact that my mortgage closed in August of 09. It seems to me that this isn’t really about opening HARP to as many people as possible, but about making some political hoopla.

    Thanks,
    Andrew

  2. Mike Mc Says: November 16th, 2011 at 2:52 pm

    Was looking forward to HARP 2.0 in hopes of taking advantage of the adjusted program, but still do not qualify. I’m sure I’m in a small majority, but this program doesn’t help me still.

    I’m in good standing with my payments, have LE ratio of about 85/15, but my sticking point the first time around was that my loan was not backed by either FannieM or FreddieM (Wells Fargo mortgage). Disappointed that there is nothing out there to help people like me given the situation.

  3. Tim Manni Says: November 16th, 2011 at 6:09 pm

    Andrew B,

    I think that cutoff date remains because they have to instill some limits to who all can qualify. Furthermore, this program is meant to target borrowers who’s home values the most affected by the downturn in home prices. The deepest declines in prices, as far as I’m aware, happened between 2007 and 2009.

    Thanks for your comment Andrew,
    Tim

  4. Tim Manni Says: November 16th, 2011 at 6:13 pm

    Mike Mc,

    Yes, your loan must be guaranteed by Fannie or Freddie.

    If you want to be sure, look up your loan on these two links:

    Fannie: http://www.fanniemae.com/loanlookup/
    Freddie: https://ww3.freddiemac.com/corporate/

    Thanks for commenting,
    Tim

  5. HARP 2.0 is Here…….Now What? « Stuff About Mortgages Says: November 18th, 2011 at 8:59 am

    [...] Fannie, Freddie release HARP 2.0 details (hsh.com) [...]

  6. Malcolm T. Says: November 18th, 2011 at 10:05 am

    Sad that they couldn’t come up with a solution for home owners with LPMI(lender paid mortgage insurance). This would have helped a lot of people.

  7. Dean Says: November 18th, 2011 at 8:51 pm

    Do we know yet if the LTV limit is still 125%? That’s been the killer for us (though we’re close). I’d think those with the highest LTVs are those who would be helped the most.

  8. HARP 2.0 not for everyone. But maybe for you. Says: November 22nd, 2011 at 12:38 pm

    [...] is a good analysis of the HARP 2.0 Rules from one of the top mortgage analysts.  If you want to torture  yourself, you can real the actual [...]

  9. Yvonne Says: December 2nd, 2011 at 10:36 pm

    Your lender will no longer need to guarantee to Fannie and Freddie that your original mortgage met all its eligibility requirements.

    What does this mean? This means that lenders will be more willing to refinance your loan since they will not be held liable for any errors in your old mortgage loan.

    Is this something I need to worry about? I am not clear about what type of errors they mean?

  10. tricia Says: December 5th, 2011 at 12:21 am

    Im delinquent on my second mortgage. Will this disqualify me w/my first mortgage?

  11. FORECLOSURE ALTERNATIVES » HAPR 2.0 Refinance Rules – Can it help you? Says: December 16th, 2011 at 5:31 pm

    [...] is a good analysis of the HARP 2.0 Rules from one of the top mortgage analysts. If you want to torture yourself, you can real the actual [...]

  12. diana Says: January 24th, 2012 at 11:11 am

    I have perfect credit have never been late on a payment low debt to income ratio and i cant qualify for harp because i currently have mortgage insurance.WTF?is a way to get people to buy mortgage insurance?I am so confused by this I heard there is going to be a harp 3

  13. Jay Levitt Says: February 3rd, 2012 at 1:14 pm

    I know that there has been a lot of confusion and discussion regarding the HARP Program, The 3 Step Refinance Program and then most currently the so called HARP 2.0 Program launching in a couple of days. I have originated about 900 HARP loans since 2010 and am very up to speed on the rules of these programs. If you are confused about questions such as:
    1-Am I eligible for the a version of the HARP Program?
    2-Why am I not eligible for the HARP Program?
    3-What is the maximum LTV/CLTV for the HARP Program?
    4-What type of property type changes are allowed with the HARP Program (second home, investor, etc)
    5-What are the FICO requirements of the HARP Program?
    6-Is is OK to have a bankruptcy, foreclosure, short sale and still participate in the HARP Program?
    7-Why are the rates sometimes better the higher the LTV with the HARP program?
    8-Why are some people eligible for the traditional HARP path and others are eligible for the traditional HARP path and the 3 Step or super streamline path?
    9-Can I participate twice in the HARP Program?
    10-Can I go through the HARP Program with a lender other than my existing lender?
    11-What is the difference e between HARP and the soon to be launched HARP 2.0 as they call it?
    The list of questions for the HARP Program, the so called HARP 2.0, and 3 Step program are wide. I know there is a lot of confusion based on the many conversations I have daily with people. I am here to take the mystery out of the HARP Program and to be of service. I will do my best to slowly and carefully explain to you everything you need to know. Feel free to ask me questions on this board, call me on my direct line at 800*413*6001 or email me at jay.levitt@wellsfargo.com or jlevitt@signaturelendingteam.com.. This is an exciting time with the new program launching.

  14. Alexander Farah Says: February 24th, 2012 at 9:42 am

    Mike if you are not fannie or freddie, if you purchased FHA you can also drop your rate wihtout an appraisal. Let me know if you need my help with that sleepingsatelite2@yahoo.com

  15. rahul kshirsagar Says: February 29th, 2012 at 5:53 pm

    I am unemployed for the last once year with no mtg lt pymts, I rcv unemployemtn income of $1800/mth do i qualify for this prog & which lender should i approach.

  16. Sumit Says: March 1st, 2012 at 12:51 pm

    Hi Tim,
    I just have one question. Do I still qualify for HARP, if I have a PMI on my original loan.
    Other than that I think I should qualify becuase,

    1) My closing date was March 2008
    2) My loan is guaranteed by freddie mac
    3) Not already refinanced by HARP
    4) LT ration above 80%
    5) I am current on my mortgage payments. Never late.

    Can you help me understand if I qualify for this program if I have PMI and that is too lender paid.

  17. Teri Says: March 4th, 2012 at 11:37 am

    My first mortgage is owned by FNMA. I also have a second with a different servicer. Do I qualify for HARP 2.0? Is there an opportunity to combine my second at market rate?

  18. Tim Manni Says: March 5th, 2012 at 12:57 pm

    Rahul,

    To qualify for this, you must be current on your loan and show the ability to continue to make payments. If you’re struggling to make payments, I would suggest researching this federal program: Home Affordable Unemployment Program:

    http://www.makinghomeaffordable.gov/about-mha/faqs/Pages/default.aspx

    Thanks for reading and commenting,
    Tim

  19. Tim Manni Says: March 5th, 2012 at 1:04 pm

    Sumit,

    Here’s how mortgage insurance affects your chances at a HARP refi:

    Technically, you shouldn’t be turned down from the HARP program because of mortgage insurance. MakingHomeAffordable.gov explains that HARP has a policy for applicants with and without mortgage insurance, and that both have the potential to qualify.

    Here’s the info we’ve posted on our blog:

    http://blog.hsh.com/index.php/2012/01/does-mortgage-insurance-hurt-my-chances-of-a-harp-refinance/

    The necessity of mortgage insurance can make it harder to secure a new loan through the Home Affordable Refinance Program (HARP). HARP was designed to help underwater homeowners refinance to current mortgage rates. Under HARP, if your original loan did not require mortgage insurance, your new loan won’t either, even if its loan-to-value ratio exceeds 80 percent (or even 100 percent).

    However, if your current loan has mortgage insurance, your new one has to have the same amount of coverage, and that can be a problem.

    Mortgage insurers don’t want to take on this risk, so they won’t write new policies on HARP refinances. You have to keep your current policy, which means you have to use your current lender. Not all lenders participate in the program or have the incentive to give you a lower rate.

    Here’s a link for more info on who qualifies:

    http://www.makinghomeaffordable.gov/about-mha/faqs/Pages/default.aspx

    Thanks for reading and commenting,
    Tim

  20. Tim Manni Says: March 5th, 2012 at 1:27 pm

    Teri,

    Thanks for reading and commenting. There is technically a federal Making Home Affordable program for combining two mortgages:

    It’s called the second lien modification program:

    http://www.makinghomeaffordable.gov/about-mha/faqs/Pages/default.aspx

    As far as HARP 2.0 is concerned, the second mortgage makes things complicated. Here’s an article for a little more context: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/04/RENL1NF6OI.DTL

    I would contact your servicer or lender to see what options are available to you to refinance two mortgages into one.

    Thanks,
    Tim

  21. Tony Brula Says: March 20th, 2012 at 4:37 pm

    I just got word from my company Access National Mortgage that we are capped at 105%, which is no change from HARP 1.0, so I’m a little upset about it.

  22. American Relief fan Says: March 24th, 2012 at 8:51 pm

    If anybody needs help with a harp loan you should contact the people at American Relief I was told I could not do my harp loan but they got it done for me with no appraisal and no closing cost saved me over 700 dollars a month I was blown away I went from a 7 to 4 percent rate I love you guys if anybody need to reach them u can contact them http://www.AmericanRelief.com or just call them 877) 925-9119

  23. JimsTowne Says: April 9th, 2012 at 12:26 pm

    I was told Freddie Mac still hasn’t released the details to lenders on how they are handling HARP 2.0?
    Any word from anyone on when they are going to release this, since Fannie has already released their information?

    @Tony – I believe some of the lenders are doing 150%.

  24. Tim Manni Says: April 11th, 2012 at 11:17 am

    JimsTowne,

    Freddie released the details to lenders on Thursday, march 15. I got confirmation on that from several lenders I speak with.

    Technically, there is no LTV cap.
    Thanks for commenting,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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