Revamped Making Home Affordable Eligibility “HARP” Requirements

Update November 17th: On the 16th we received notification that the full implementation of the new changes will not be ready for funding in the secondary markets until March 2012. The reason for the delay is to get the DU automated underwriting systems programmed to except the new guidelines of no maximum LTV ( loan to value)and other changes. As I receive updates, I will post those items on this blog.

The government announced changes to its HARP (Home Affordable Refinance Program) October 24, 2011 and we are expecting the full program written guidelines by November 15th and the ability to fund these loans by December 1st. Based on what we know already, here is information and answers to your questions. “Guidelines are subject to change once the official written requirements become available”

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance without paying down principal and without having to pay mortgage insurance provided you are not currently paying mortgage insurance on your existing loan.

What Is HARP?
HARP was started in April 2009. It goes by several names. The government calls it HARP, as in Home Affordable Refinance Program.
The program is also known as the Making Home Affordable plan, the Obama Refinance plan, and Relief Refinance.
In order to be eligible for the HARP refinance program:
1. Your loan must be backed by Fannie Mae or Freddie Mac.
2. Your current mortgage must have a securitization date (closed) prior to June 1, 2009
If you meet these two criteria, you may be HARP-eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-eligible.

HARP: Questions and Answers

Do these question-and-answers account for the "new" HARP program?
Yes, everything you are reading is accurate as of today, October 31, 2011. This post includes the latest changes rolled out by the Federal Home Finance Agency on October 24, 2011.

How do I know if Fannie Mae or Freddie Mac has my mortgage?
Fannie Mae and Freddie Mac have "lookup" forms on their respective websites. Check Fannie Mae's first because Fannie Mae's market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.

If my mortgage is held by Fannie Mae or Freddie Mac, am I instantly-eligible for the Home Affordable Refinance Program?
No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier. Let us assist you in working through the details to verify your eligibility.

Is "HARP" the same thing as the governments "Making Home Affordable" program?
Yes, the names HARP and Making Home Affordable are interchangeable.

My mortgage is held by Fannie/Freddie. Now what do I do?
Find a recent mortgage statement and write "Fannie Mae" or "Freddie Mac" on it -- whichever group backs your home loan -- so you don't forget. Give that information to your lender when you apply for your HARP refinance.

What if neither Fannie Mae nor Freddie Mac has a record of my mortgage?
If neither Fannie nor Freddie has record of your mortgage, your loan is HARP-ineligible. However, you may still be eligible for a "regular" refinance to lower rates. Or, if your mortgage is insured by the FHA, you can possible use the FHA streamline refinance program.

Am I eligible for this revised Home Affordable Refinance Program if I'm behind on my mortgage?
No. You must be current on your mortgage to refinance via HARP. There are other parts to the HARP program that may provide assistance to homeowners who are behind on payments to avoid foreclosure. You can access the HARP website (click here)

Will the Home Affordable Refinance Program help me avoid foreclosure?
No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It's meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today's low mortgage rates.

What are the minimum requirements to be HARP-eligible?
First, your home loan must be paid on-time for the prior 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. And, third, you may not have used the HARP program before -- only one HARP refinance per mortgage is allowed.

Is there a 125% loan-to-value restriction for HARP?
No, there is no 125% loan-to-value restriction. All homes,regardless of equity are eligible for the HARP program.

I am really far underwater on my mortgage. Can I use HARP?
Yes, you can. There is no loan-to-value restriction under the HARP program.

Maybe I wasn't clear. I am really, really far underwater on my mortgage. Are you sure I can use HARP?
Yes, I am sure. The new HARP program specifically has no loan-to-value restriction so that homeowners in Florida, California, Arizona and Nevada can take advantage of it. You can 300% loan-to-value, and still be HARP-eligible. HARP is now unlimited LTV.

Will my home require an appraisal with the HARP program?
Sort of. Although your home's value doesn't matter for the HARP program, lenders will run what's called an "automated valuation model" (AVM) on your home. If the value meets reliability standards, no physical appraisal will be required. However, your lender may choose to commission a physical appraisal anyway -- just to make sure your home is "standing".

Is HARP the same thing as an FHA Streamline Refinance?
No, the HARP program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA (HUD). The programs have similarities, however.

Do I have to HARP refinance with my current mortgage lender?
No, you can do a HARP refinance with any participating mortgage lender. Sound mortgage, Inc. and I can assist you in refinancing at today's low mortgage rates.

So, I can use any mortgage lender for my HARP Refinance?
Yes. With the Home Affordable Refinance Program, you can refinance with any participating HARP lender. Sound Mortgage Inc. and I can assist you with this program.

I put down 20% when I bought my home. My home is now underwater. If I refinance with HARP, will I have to pay mortgage insurance now?
No, you won't need to pay mortgage insurance. If your current loan doesn't require PMI, your new loan won't require it, either.

I pay PMI now. Will my PMI payments go up with a new HARP refinance?
No, your private mortgage insurance payments will not increase. However, the "transfer" of your mortgage insurance policy may require an extra step. Remind your lender that you're paying PMI to help the refinance process move more smoothly.

What's the biggest mortgage I can get with a HARP refinance?
HARP refinances are limited to your area's conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $625,500. You can contact me for this information.

Can I do a cash-out refinances with HARP?
No, the HARP program doesn't allow cash out refinance. Only rate-and-term refinances are allowable.

Can I refinance an investment/rental property with HARP?
Yes, you can refinance an investment/rental property with HARP, even if the home was once your primary residence. You can refinance a home on which you're an "accidental landlord" via HARP. The loan must meet typical program eligibility standards.

Can I refinance a second/vacation home with HARP?
Yes, you can refinance an second/vacation property with HARP, even if the home was once your primary residence. The loan must meet typical program eligibility standards.

Are condominiums eligible for HARP refinancing?
Yes, condominiums can be financed on the HARP refinance program. Warrant-ability standards still apply.

Can I consolidate mortgages with a HARP refinance?
No, you cannot consolidate multiple mortgages with the HARP refinance program. It's for first liens only. All subordinate/junior liens must be re-subordinated to the new first mortgage.

Can I "roll up" my closing costs with a HARP refinance?
Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash. In no cases may loan sizes exceed the local conforming loan limits, however.

I am unemployed and without income. Am I HARP-eligible?
No. Income verification is required for the HARP refinance program.

My original mortgage was a stated income loan. Will my income be verified with a HARP refinance?
Yes, with HARP, applicant income is verified in the same manner as with a traditional refinance -- via a combination of W-2s, paystubs, tax returns and other, underwriter-requested documentation.

What are the HARP program's mortgage rates?
Mortgage rates for the HARP program are the same as for a "traditional" refinance. There is no "premium" for using the HARP program.

Do HARP refinances use Loan-Level Pricing Adjustments?
Technically, loan-level pricing adjustments do not apply to HARP refinances, but borrowers may be subject to LLPAs based on their respective credit scores or home-types (e.g.; 2-unit, 3-unit, 4-unit). Loan-to-Value LLPAs are reduced and/or waived.

Is there a minimum credit score to use the HARP program?
No, there is no minimum credit score requirement with the HARP refinance program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.

What does the term "DU Refi Plus" mean?
"DU Refi Plus" is the brand name Fannie Mae assigned to its particular flavor of the HARP program. "DU" stands for Desktop Underwriter. It's a software program that simulates mortgage underwriting. "Refi Plus" is a gimmicky-sounding term that could have been anything. The name has been trademarked, however. As an aside, Freddie Mac is using the branded name "Relief Refinance".

Can I remove my spouse or a co-signer with a HARP refinance?
Maybe. HARP guidelines specifically prohibit removing a co-signer from the note, but there are circumstances in which you can remove a co-signer from the mortgage and from the deed so that the former co-signer has no ownership interest in the home.

For how long should I lock my mortgage rate via the HARP Program?
Lock for 30 days, at minimum. This is because the HARP program, while streamlined for simplicity, still has some grey areas that can lead to delay. It's better to have a rate lock that lasts too long than not long enough.

When does the HARP program end?
If you are HARP-eligible, you must close on your mortgage prior to January 1, 2014

How do I apply for the HARP program?
You can apply on-line by accessing my website (click here) or contact me for other options.

There is no fee or obligation to apply For the Home Affordable Refinance Program
Please feel free to contact me with questions or to get a “No Cost or Obligation” analysis if you and your home will qualify for the HARP refinance program, Access my webpage (click here)

Lastly, don't forget! The Home Affordable Refinance Program is not meant to save a home from foreclosure. It's meant to give underwater homeowners a chance to refinance to lower their monthly payments or reduce their term with close to the same payment which will increase equity faster. If you need foreclosure help, call your current loan servicer immediately.

Is Buying - Owning a Home Still a Good Investment?

The ongoing housing crisis and precipitous fall of home values has financial experts questioning the long-term value of buying/owning a home. This firmly held belief of both financial planners and ordinary citizens has been backed by a century’s worth of economic data, but new numbers have challenged the pedestal on which home ownership has been placed. Indeed, with the new economic realities that have appeared in the past year, from exploding deficits to unprecedented government intervention, the question should be asked: Is buying/owning a home still a good investment?

The Wall Street Journal, Jim Cramer, and Home Values

At the forefront of this new, opposing view is the Wall Street Journal, which recently calculated that the return on owning a home was only 1.15% a year above inflation since 1987 (recent housing boom) and 2.2% a year above inflation since 1994 (recent housing bust). These numbers represent the change in the Case-Shiller Index of 10 major cities. Yet, even if the appreciation of the home doesn’t offset the interest of the mortgage, the imputed value (living rent-free) still makes for a solid investment for owners who live in the home. Often, this imputed value alone can equal 4-8% of the value of the home (although not the total amount of the mortgage) each year. The WSJ article mentions this point, but doesn’t emphasize it, and seems to speak more to people who would buy a home as investment property.

At the opposite end of this spectrum is Jim Cramer, who recently declared that it was “patently obvious” the housing bottom had arrived. Of course, Cramer’s bent is distinctly more short-term than the analysis from the WSJ, but if the housing market has hit bottom (a historic bottom, perhaps), it takes some of the teeth out of the WSJ’s analysis.

Here are links to these sources in their original context:
Wall Street Journal Article
Huffington Post

Homeownership vs. Renting/Stock Market

The investment value of owning a home can be seen through two common—and very different—scenarios. First, in terms of getting a return on capital, should someone invest in real estate, the stock market, or some other investment opportunity? Second, in terms of planning for retirement, should someone rent or own a home? Unsurprisingly, many investments show poor returns right now, even when looked at over a period of 10 to 15 years. Moreover, most financial advisers would probably tell you that, while both the housing and stock market have large upsides right now, the housing market is probably the safer of the two options right now. After all, while Cramer is unequivocally declaring the bottom of the housing market, many Wall Street analysts are still calling the recent surge a bear-market rally. Moreover, a real estate investor has the entire country to scour, looking for deals and upside. Thus, anyone wishing to invest capital in the real estate market will probably find a better return than the national average, comprised mainly by owner-occupied homes.

What’s interesting about the debate between owning and renting a home is the narrowing gap between the monthly costs. In 2003, the average monthly rent payment was $651, while the average monthly mortgage payment (including home maintenance costs) was only $758, according to the Census Bureau’s American Housing Survey. By 2007, at the tail end of the housing bubble, this gap had ballooned to a $755 average rent payment and a $972 average mortgage payment. The housing bust has undoubtedly narrowed this gap again. In fact, in some areas where home prices have been hit hardest and while interest rates remain reasonable, monthly mortgage payments are now lower than monthly rent payments. Thus, with nearly equivalent costs to renting, owning a home becomes a no-brainer and any equity you build over the years is simply icing on the cake.

Why It’s Important to Ask the Question

Although the Wall Street Journal‘s analysis isn’t convincing to most people, it does at least make people aware that their specific home purchase is no guarantee of a financial windfall. Indeed, the unquestioned value of buying a home likely contributed to the haphazard, no-worry stance of home-buyers who ignored or shrugged-off the unfavorable terms of sub-prime mortgages.

Likewise, Jim Cramer’s pontifications don’t mention the fundamentals of wise home-buying and ownership that can make the difference in real estate investment, even during the peaks of buyer’s and seller’s markets. Passing on the most expensive home on the block, avoiding a bidding war, finding a home in good condition, seeking out multiple lending institutions and loan terms, and, in general, looking for value in your real estate purchase are all pivotal for the long-term return on your property, not to mention staying above water in terms of equity.

Federal Reserve to Backstop Bank of America’s & JP Morgan's European Derivatives

Bank of America (BofA) is shifting derivatives in its Merrill investment-banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC, reports the Daily Bail.

What does this mean?
It means that the BofA’s European derivatives are now going to be “backstopped” (i.e. supported) by U.S. taxpayers. What is even more shocking is that, according to the same Daily report, Bank of America did not even seek or receive regulatory approval for this; they “just did it at the request of frightened counter-parties.”

Given the dismal financial situation in the euro-zone, the Fed and the FDIC are now bickering back and forth as to whether or not this is a good idea. The FDIC (“which would have to pay off depositors in the event of a bank failure”) disagrees with the transfers while the Federal Reserve “has signaled that it favors moving the derivatives to give relief to the bank holding company,” reports Bloomberg.

Daily Bail reports:

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input . . . JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.

What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan.

A CDS is a credit default swap. It’s a lot like an insurance policy in that it requires the seller of the CDS to compensate the buyer in the event of loan default. Bank of America and JP Morgan have been selling these at an almost breakneck pace.

Get that? The FDIC is now insuring trillions in CDS contracts sold by Bank of America and J.P. Morgan. Where do you think the FDIC gets the money to compensate the buyers of said CDS contracts?

The Daily report continues:

Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.

This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks.

His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.

Some regulators are not terribly happy with the move and are currently discussing how best to protect FDIC banking operations.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator, in a recent Bloomberg article.

“We should have fairly tight restrictions on that,” he added.

Not surprisingly, those involved in this latest move by the Feds and Bank of America are remaining quiet about the whole deal.

Jerry Dubrowski, a spokesman Bank of America, declined to give Bloomberg a comment but only said (via email) that Bank of America “continues to accommodate the needs of our clients through each of our multiple trading entities, including Bank of America NA [referring to the company’s deposit-taking unit].”

Barbara Hagenbaugh, a Fed spokeswoman, told Bloomberg that she couldn’t discuss supervision of specific institutions.

Greg Hernandez, an FDIC spokesman, declined to comment.

Read the full story here
author/Becket Adams

The 4% mortgage - good luck getting one

"read my comments below this article"
NEW YORK (CNNMoney)By Les Christie -- A 4% mortgage sounds too good to be true -- and for more than 90% of borrowers, it is.

The average rate for a 30-year mortgage dropped below 4% earlier this month for the first time, hitting 3.94%, Freddie Mac reported.

But at the same time, LendingTree reported that the average rate offered to borrowers by its network of lenders was about 4.32%.

Only about 9% of LendingTree borrowers got loans below 4%. About a third got loans between 4.5% and 5%.

Those rates are still low, but a half point rate difference adds about $700 a year to the payments on a $200,000 mortgage.

There are a couple of reasons why so few borrowers get the best deals. One is that Freddie Mac surveys lenders, and the rates they quote apply to borrowers with flawless credit, ones with high credit scores and who put down 20% or more. The LendingTree numbers reflect actual loans that borrowers got.

There's another factor in play, too. The low rates draw in a flood of current homeowners looking to refi. Nearly 80% of all mortgage applications lately have been to refinance existing loans. The rush of applicants can drive up rates.

"Lenders quickly become flooded with volume and can adjust rates to slow their pipelines," said Doug Lebda, CEO of LendingTree.

The industry can handle less volume than in the past. After the housing bust, many lenders closed their doors and large numbers of loan officers and other workers left the industry. Many lenders are understaffed and can be easily overwhelmed with applicants.

When that happens, according to David Adamo, CEO of Luxury Mortgage, the banks discourage borrowers."They expand their margins and that sends rates up," he said.

The above article is a great example why working with myself and Sound Mortgage, Inc. is better than trying to get a mortgage from a company like Lending tree, which by the way did you know that Lending Tree's business model is just to capture your interest in getting a loan and then selling the lead to three lenders, yes that's right they do not loan you any money at all!
Getting you the best possible rate in the market is and always has been very important. Many factors effect risk based pricing that Fannie Mae & Freddie Mac provide. Examples; credit scores, debt to income ratios (DTI), loan to value (LTV) etc. Other loan programs i.e. FHA, VA and USDA do not have the same risk based pricing adjusters as Fannie & Freddie and recently have been lower mortgage rates than conventional loans.
Please feel free to contact me to discuss all of your options and loan programs. No two borrowers are alike so the "one loan fits all" approach is never a good thing.

Read My Lips: A Refi Plan Is Coming

Treasury Secretary Timothy Geithner said Thursday he expects a U.S. housing

regulator in the coming weeks to detail mortgage refinance programs that could help the battered housing market.

“My sense is, based on what I’ve seen…it’s going to be meaningful enough to make a difference,” Mr. Geithner said at a Senate Banking Committee hearing.

The Federal Housing Finance Agency, which oversees government-controlled mortgage companies Fannie Mae and Freddie Mac, is evaluating ways to help more troubled homeowners refinance their mortgages at the lowest rates in a half-century.

“They are looking at a range of things and you’ll see more details in a couple of weeks,” Mr. Geithner said.

More: Six Steps That Could Boost Refinancing

To fix the economy, first fix the housing market

The article below is one of many ideas to correct the housing market and in turn help fix our economy. One thing is for sure, he is correct that you can not fix the economy without fixing the housing market. This graph tells it all!

As the housing market goes up or down, so goes our economy (see GDP in graph) Think of all the jobs that are directly effected by a strong or weak housing market, from the people who build them, supply the materials and all the items we buy that goes into the home and so on! Housing is and has been the bedrock of our great nation from the beginning. Please feel free at the bottom of this blog to tell us what your ideas are for fixing the housing market?


By John Cassidy, contributor
FORTUNE -- Is this a great country or what? At the start of last year, a friend of mine, the proprietor of a small business that has suffered badly in the recession, entered a trial mortgage-modification program. A few months later the bank told him that his application for a government-assisted refinancing rate had been turned down -- his house was too far underwater. He had bought it during the boom for $220,000, putting down $30,000, and then spent another $45,000 doing it up. Now it's worth about $100,000. Once his monthly payments were set to go back up (his mortgage rate is 6.5%), my friend stopped paying them and waited for the foreclosure and eviction notices to arrive. A year and a half later he is still inhabiting his own home and watching the mail.

Whenever I hear somebody saying that growth is about to pick up, I think about my friend and the roughly 11 million homeowners whose mortgages are worth more than their homes. Some of them are still making their monthly payments. Some, like my pal, are living for nothing. The drip-drip foreclosure crisis shows how, six years after the bursting of the real estate bubble, the U.S. residential real estate market is still a mess. And without a genuine revival in housing, it is hard to think we will ever get a self- sustaining recovery.

Sure, the news that President Obama and the Republicans are talking about enlarging this year's payroll tax cut and extending unemployment benefits through 2012 is good news. The last thing the economy needs is a $250 billion hit to spending, which is what doing nothing would amount to. But where are the serious proposals to revive the housing market? It's as if both parties have agreed to drop the issue.

Housing isn't just another industry: It's a driving force for the entire economy. Residential investment accounts for up to a quarter of overall capital investment. House prices have a big influence on consumer spending -- for every $1,000 the value of his house falls, a homeowner tends to cut his outlays by about $50 or $60. And falling property tax revenues are decimating many towns and cities. How bad is it out there? New-home construction is running at less than a third of its pre-recession level; in August it fell again. Existing-home sales picked up a bit, but that was largely because of bottom-fishing investors who are betting prices can't go any lower. Let's hope they are right. Nationwide, according to the S&P/Case-Shiller index, prices are down 6% over the past year and down 32% since the first quarter of 2006.

I'm not saying that fixing the housing market is easy. If it were, somebody would have done it. But to begin with, we could make the much-maligned Home Affordable Refinancing Program (HAMP) work better. Generally, anybody who is current on payments and whose home is worth at least 80% of the outstanding loan is eligible to participate. But many homeowners have been put off by the red tape and by additional charges that Fannie Mae and Freddie Mac, which ultimately own or insure many of the mortgages, have imposed on applicants.

Then there are folks whose mortgages are way underwater. One option: Force the banks to foreclose on them and get the whole nightmare over with. But that would dump yet more properties on the market. A better solution, which has never seriously been tried, would be to expand the mortgage-modification program, offering interest rate reductions and principal write-offs in return for options on the upside value of the property. For example, the government and the bank could reduce my friend's mortgage to $150,000 -- 150% of the property's current value -- but demand half of any profit he makes when he eventually sells the property.

The details would need working on -- there's a tradeoff between maximizing uptake and minimizing rewards to irresponsible borrowers -- but surely it is worth trying. Three years of fiddling with the housing problem haven't gotten us very far.

--John Cassidy is a Fortune contributor and a New Yorker staff writer.
This article is from the October 17, 2011 issue of Fortune.