Homeownership University

HARP, the Home Affordable Refinance Program version 2.0 is poised to help many upside down homeowners in California.

The program was originally designed to help homeowners refinance that do not meet conventional refinance guidelines.

Do you Qualify for a HARP Refinance?

Here is a simple list of qualifying criteria to determine if you’re home loan is eligible to refinance using the refinance program.

1.  Loan must be owned by Fannie Mae or Freddie Mac – click links to see if your home qualifies

2. Loan to Value must be over 80% – Current maximum loan to value is 105%.

3.  Loan must have been purchased by Fannie Mae or Freddie Mac on or before May 31st, 2009

4.  Loan must be current with no late payments in past 12 months

What’s new in HARP version 2.0?

Changes to the Home Affordable Refinance Program are few but far reaching and valuable.

Easing Liability and Costs to Lenders

Basically, the Government made changes to the lender guidelines that waives much of the liability of lenders that refinance current homeowners with the program.

With the previous HARP program, if a loan defaulted after refinancing using the program, the lender was on the hook for any losses incurred by Fannie Mae or Freddie Mac.

These “guarantees” and many of the fees have been waived or reduced resulting in more lenders being willing to participate in the HARP 2.o program.

By reducing delivery fees charged to lender by Fannie Mae and Freddie Mac, these savings are not passed on to home owners making the costs associated with refinance under the Home Affordable Refinance Program minimal.

Unlimited Loan to Value

Probably the most important change to the program is the lifting of the 105% loan to value limitation.  HARP 2.0 allows unlimited loan to value.

Who Can Offer a HARP Refinance Loan?

Lenders that sell directly to Fannie Mae and Freddie Mac may begin refinancing it’s customers under the new HARP 2.o program now if lenders manually underwrite new loans.

Your existing lender may have delays due to high volume of HARP refinance requests.

Since the availability of the new program is limited to direct sellers to Fannie Mae and Freddie Mac, I expect that you will not see the program widely available for several months.

I am actually pretty excited about these changes.  There is a tremendous opportunity here for folks that determined to stay in their homes regardless of being upside down.

Principle reduction is not a part of the HARP 2.0 changes so I also anticipate this program not going to go “far enough” for many homeowners.

For those homeowners that do qualify, this is a great opportunity and falls firmly into the category of “better than nothing” for struggling homeowners in California.

If you have questions about qualifying for a refinance under this new program, leave a comment below or give us a call to speak to a HARP refinance specialist.