Grand Rapids Mortgage Company

President Barack Obama announced HARP 2.0, a revised form of the Home Affordable Refinance Program, back in December.  Which is some great news for underwater homeowners.  What exactly is this program though and what are the qualifying guidelines to take advantage of the program?

To begin, a quick history lesson on HARP.  It was first introduced back in 2006 by the Federal Housing Finance Agency.  The goal was to allow homeowners with a loan-to-value (LTV) ratio higher than 80% to refinance without worrying about payments on mortgage insurance.  Later within the same year, the LTV cap was raised up to 125% allowing countless Americans to take advantage of the program.

Once December 2011 rolled around, President Barack Obama expanded the Home Affordable Refinance Program until December 31, 2013.  The program was thus dubbed, HARP 2.0.  A few key changes to the program came along with this extension as well.  All of which are meant to further benefit homeowners in tough situations with their current mortgage situations.

The biggest change instituted was the elimination of the LTV cap, previously set to 125%.  Now all homeowners in an “underwater” situation have the option to refinance as long as they meet just a few criteria:

• Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
• The mortgage was fully completed on or before May 31, 2009.  Anytime after is not deemed acceptable.
• Owner must NOT have a previous HARP refinance of the mortgage.  UNLESS the loan is owned/guaranteed by Fannie Mae which was refinanced under HARP between March and May of 2009.
• The homeowner must be current (on-time) with their mortgage payments.  No 30-day late payments anytime in the last six months and no more than one late payment in the past 12 months.
• MUST benefit from the loan through lower monthly payments or the move to a more stable product.

If you fit the criteria for HARP or actually don’t know if you meet the criteria you can get ahold of certified loan officers who could go through the information with you over the phone or via email.  That way it can be properly determined if you can take full-advantage of HARP 2.0.

If you have recently purchased a home or refinanced to take advantage of the incredible mortgage rates, then you are familiar with the endless amounts of paperwork. If you have not recently gotten a loan, here is something to look forward to; More paperwork!

The Federal Housing Finance Agency (FHFA) has announced that it will be working closely with mortgage purchasers Fannie Mae and Freddie Mac to implement more regulations.

The new Loan Quality Initiative was implemented June 1st 2010 to improve the compliance with underwriting and eligibility guidelines. One large factor in which lenders are hesitant to issues loans to borrowers is their risk of a repurchase. If it is discovered that there is an error with the loan, the lender may be forced to repurchase the loan with their own funds (Do you have a spare $150,000 laying around?).

Important compliance issues such as these are typically not detected until after loans are delinquent or in the foreclosure process which is exactly when a lender would not want to own this loan.

Here are some important “Enhancements”:

Borrower’s Identity: Lenders must confirm borrower’s identity multiple ways including using Third-Party vendor services (More Fees!)

Borrower Occupancy: Lenders must verify that borrowers are occupying their home as intended (door to door?).

Undisclosed liabilities: Lenders must verify that the borrower has not incurred additional loans or liabilities since the initial application. Lenders will now have to pull a second credit report prior to closing.

EarlyCheck: A new validation system that will allow Fannie Mae to audit lenders’ loans at any point in the process.

Overall my recommendation to borrowers would be to plan on a cramped hand from signing and resigning loads of paperwork, be straightforward with your Loan Officer and make them aware of your situation and DO NOT use your credit cards for large purchases or try to obtain more loans throughout the mortgage process.

For More Information Visit: https://www.efanniemae.com/sf/lqi/pdf/lqisummary.pdf