HARP 2.0 About to assist the “Upside Down Borrower”

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Most banks still don’t have a set date for when they will be accepting applications for the new HARP 2.0 program, but for those borrowers that the program is aimed to assist it is not to early to start doing the legwork. Banks are slowly putting forth a number of changes that will be implemented individually and are getting systems updated in an effort to be fully ramped up by the end of the 1st quarter.

HARP 2.0 was implemented in order to assist those that have been somewhat “upside down” in their mortgage but have maintained their mortgage payments and decided not abandon their homes. For all of you that came to the closing table with 20% down, documented your income, did everything right, lived the American dream of home ownership and ended up losing 50% of your home’s equity. It is exactly you that the news has spoken about on a nightly basis in that none of the stimulus packages have helped; it is you they speak about in that you can’t qualify to take advantage of these low rates due to appraised values of your home. Everyone has spoken about how taking advantage of these low rates is a once in a life time opportunity, however due to the value of your home (no fault to you) you are unable to participate.  But you hung in there and have met your obligations, abided by your contract and helped maintain your neighborhood. Finally you will be rewarded for being honest, hard working and diligent. Taking advantage of a low rate while mortgage refinancing is now a reality.

HARP 2.0 will have no appraisal and will help these people take advantage of rates near the 3.875% 30 year fixed range that currently exist. So how do you finally take advantage of the one program that was designed to help your situation?

First off it is important to note that the government states that there are more than 7 million who are expected to qualify under the expanded HARP 2.0 guidelines, so it is vital to begin the application process and start speaking with a mortgage professional so your paperwork doesn’t take a backseat with the rest of the millions of transactions that will flood the banks in the coming months.

Here are the requirements set forth;

• Verify your mortgage is held by either Fannie or Freddie.  HARP mortgages are backed by Fannie Mae and Freddie Mac. To check if your mortgage is backed by Fannie Mae, visit http://www.fanniemae.com/loanlookup/. If your mortgage is not found, try Freddie Mac’s loan lookup at https://ww3.freddiemac.com/corporate/. Mortgages not listed on either website are not backed by Fannie or Freddie and, therefore, are not HARP-eligible.

• Determine if your mortgage is old enough: Only those whose mortgages were securitized prior to June 1, 2009 can apply for HARP. In general, this means that your mortgage must have started in mid-May 2009 or earlier. If you no longer have your paper work to look the date up call the title company that assisted you in the closing and they can supply you with the start date of your loan. Keep in mind if your loan changed hands the start date may not have actually been the closing date and could have been a month or two later.

• Does your mortgage contain “Lender Paid Mortgage Insurance” (LPMI).  The government specifically excludes homeowners that chose LPMI, but HARP 2.0 does assist homeowners with borrower paid PMI overall.

• You must be current! HARP 2.0 rewards all homeowners have made their last six mortgage payments on time, with a maximum of one 30-day late payment in the past year. Obviously this information will be verified, so if you don’t fit this billing, it will come up through the underwriting process after your credit report is pulled.

• Besides that make sure you have all of the typical documents ready for review: bank statements, drivers license, homeowners insurance deck page, pay stubs and W-2s.

Obviously the more readily available you have these items these items ready for your banker will have a impact on the speed and efficiency of the loan process.

So the biggest and most important part of HARP 2.0 that has not been mentioned yet.  How does it assist the “upside down borrower”?

The initial HARP program required home owners to owe no more than 125% of what their homes were appraised for.  The problem as you know is that many homes have plummeted in value.  HARP 2.0 attempts to address that issue by waiving the requirement. Does this mean you will have no appraisal needed?  To be honest no bank provides a straight answer on this as of yet.  Stand by…  The good thing is that you now have the ability to stay in the home you have started your family in, begun to raise your kids, no new school district, etc. etc. etc.  You have been patient and now your mortgage payment is about to get cut drastically.

HARP 2.0 will inevitably create a rush in refinance applications in all participating banks once the program is fully functioning. So be ready to finally take advantage of the program that was designed to assist you in taking advantage of these historic low rates!

If you have any question or need our suggestions on finding a good lender for your needs never hesitate to ask.  There are several banks to choose from but each borrower has a different situation and different banks cater to different situations, so do your homework!

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