If you’re still underwater and need to refinance your mortgage loan, the HARP 2 program requirements and often times referred to as HARP 2 new guidelines are very flexible and have been overhauled to accommodate the vast majority of underwater homeowners. HARP 2 Mortgage Program is also known as the Home Affordable Refinance Program, however, you may have also heard it referred to as Making Home Affordable, DU Refi Plus (Fannie Mae, FNMA), and Relief Refinance (Freddie Mac, FHLMC) and the Obama Refi. The loan program has been extended thru December 2016.
The HARP 2 Program was refurbished to accommodate more underwater homeowners since the initial program had failed. The Obama Refi Program’s primary purpose was to place eligible homeowners in a better position by reducing their interest rate and loan term and moving them from a risky loan (such as the option ARM, interest only or short term ARM) and placing them in a more stable product (30 year fixed rate product).
In order to take advantage of this program, you must adhere to the following HARP 2 Program requirements:
- You must currently reside in your home. The HARP 2 allows refinancing of a second home, 1-4 unit investment property, condos, PUD’s and manufactured homes.
- You must be current on the mortgage with no late payments in the last six months and no more than 1 late payment in the past 12 months.
- Your mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009. Please use the following loan lookup tools to learn who owns your loan:
- The HARP program allows only one refinance. If you have refinanced under the earlier version of HARP you will not qualify.
- There are no loan to value (LTV) limits on your mortgage loan provided you are applying for a fixed rate 30 year loan term. You will still qualify for the HARP loan no matter how “underwater” you may be. However, there is one exception. If an adjustable rate mortgage is made, then you will be limited to a 105% LTV cap.
- There is no appraisal since the LTV is unlimited. However, be aware that most lenders will require an “automated valuation model” (AVM). This is simply done using resources from reliable databases. A physical appraisal is usually not required, although some lenders may want to have verified evidence that a structure exists.
- Jumbo mortgage loans are not HARP qualified. A jumbo mortgage are loans that are above the conforming loan limit of $417,000 or $625,000 in high cost areas (approx. 100 counties are in high cost areas).
The HARP 2 Program requirements has much more flexibility and allows for the average homeowner to easily qualify for this program. But, I must mention that some of you may still run into problems with your lenders because of their own guidelines that often times exceed FNMA or FHLMC requirements. In the mortgage industry we call it “lender overlays.”
Also if you have been turned down by your lender because you do not qualify under HARP 2 qualifications, apply at a different HARP approved lender. If you know who owns your loan, you can click on one of the investors below to find an approved lender in your state.
Please know that not all lenders will adhere to the HARP 2 program requirements, because they will have their own guidelines that is called “overlays.” Overlays are lender guidelines (not investor quidelines) such as limits on LTV which could be 125% because they may consider you a high risk. Sometimes they may even have FICO score limits of 620 or better.
If you have been denied the HARP 2 loan because of a high LTV or low FICO score, you may apply with a different lender who may have different guidelines and your loan may be approved.
Please note that the lender always makes the final decision about approving your loan, they do not have to abide by investor guidelines, if they feel it is not in their best interest or their investor.
If You’re Not able to Qualify for the HARP 2.0
If for some reason you are not able to qualify for the HARP 2.0, there are loan modification programs that you may be eligible to lower your payments or terms of the loan. I have created other pages that should resolve your. Please review my link “Solutions to Foreclosure” where you will find many loan modification programs that will fit your needs.
The HARP 2.0 Has Been Met with Success
The HARP loan program has been met with much success primarily due to the Obama Administration offering incentives to lenders to release them from the liability on the original loan.
In addition, other factors that contribute to the success of the program are no limits on the LTV, reducing the mortgage payments as well as the terms, offering better loan products….fixed rate mortgage, lower interest rates, limited appraisal requirements, no credit scores, second lien subordination or combining both loans.
If you are looking to refinance your underwater loan there is still plenty of time, contact your current lender and start negotiating with them.
Let me know if you need advise or direction by contacting me or leave a message below.