New Harp Rules Start March 17
Is the luck of the Irish with homeowners at long last? We find out on March 17, when the new HARP2 program is implemented. This plan has been in the works for a while now, and significantly, it impacts homeowners with Freddie Mae and Fannie Mae loans.
HARP 2 is a revamp of an original government homeowner assistance program, HARP. HARP was a total disaster, helping only a small percentage of the homeowners targeted. This time around, a major problem with HARP, falling home prices, has been confronted head on. This is being done by eliminating the current loan to value limits. The program also covers agency (Freddie Mac and Fannie Mae) loans.
Right now, a home is not eligible for refinance if the loan to value (mortgage amount vs. value of home) ratio exceeds 125%. This requirement is eliminated on March 17, and there’s no LTV ceiling any more. This greatly expands the number of loans that can be potentially refinanced. While appraisals will still be required, for the most part the computer software will make determinations if one is required in your situation. The required property inspections may be waived as well.
To qualify under HAMP 2, the borrower must have a minimum credit score of 620. The borrower must not have been late or missed any payments in the 12 months prior to the application. Fannie Mae or Freddie Mac must be the owner of the loan. The loan cannot have been modified or changed by the lender, and if a second trust deed has been settled, you are not eligible for the program.
To find out if Fannie Mae owns your loan, you can check their website at fanniemae.com/loanlookup. To find out if Freddie Mac owns your loan, you can check their website at freddiemac.com/mymortgage. Enter in the applicable information and your loan will be checked against the databases.
The borrower cannot have had a foreclosure in the past 7 years, and no short sale for the past 4 years. Finally, the loan to be refinanced has to have been written before May 31, 2009.
Your source of income will need to be verified, so get your W-2 and paycheck stubs handy. It is also helpful to have looked at a 1003 form, which is the standard mortgage application form. This form is readily available on the web; just type in “1003 application” as your search term and you will come up with several. Download and go through this form carefully. The documentation requirement needed nowadays to qualify for a loan is tremendous. As you work your way through the application, you should make a checklist of what is asked. You should then locate a piece of paper (check stub, account statement, etc.) which validates each entry you make in the form.
Once you have done this, keep all these papers in a file. That way, when you get the frantic call from the underwriter needed something else, it’s all in one spot. Good luck with your refinance!
