Saturday, October 29, 2011
New HARP Guidelines overview
The Home Affordable Refinance Program (“HARP”) was created to assist troubled homeowners in refinancing their loans to reflect current conditions within the housing market. Under the program, qualified homeowners were often permitted to refinance their mortgages at lower rates.
Restrictions on qualification and the general costs involved with HARP application lead to very few homeowners seeking relief under this program. In order to make HARP more accessible, the White House and federal regulators are implementing modifications to homeowner qualification requirements and reducing the costs associated with application this program.
Below is a brief outline of qualification requirements, the announced modifications to such requirements and the limitations of HARP:
(1) Who is eligible for HARP?
- Those whose loans are owned or backed by Fannie Mae or Freddie Mac, which the government took control of three years ago. Homeowners can determine whether their mortgage is owned by Fannie or Freddie by going online:
Freddie’s loan tool is at freddiemac.com/mymortgage;
Fannie’s is at http://www.fanniemae.com/loanlookup/
To qualify under HARP, a loan must have been sold to Fannie and Freddie before June 2009.
- Homeowners must be current on their previous six mortgage payments. One late payment within six months, or more than one in the past year, would automatically disqualify the homeowner from eligibility.
(2) What modifications have been made to HARP?- Previously, HARP only permitted homeowners who owed less than 125% of their homes fair market value to qualify for the program. Now, there is no restriction on how much value the home has lost in order to qualify if all of the other requirements are met. It should be noted that additional qualifications still exist if there are multiple mortgages on the property.
- Under the original program, many fees associated with closing, processing and appraisal were necessary costs borne to the homeowner. The modified program will eliminate certain fees for closing, title insurance and lien processing, making the refinance cheaper.
Additionally, loan fees will drop and will be waived for homeowners who reduce their loan term, and fewer homeowners will be required to have their homes appraised prior to seeking a refinancing. Lenders will also benefit in some instances because they won’t have to buy back the mortgages from Fannie or Freddie, as they previously had to when dealing with some risky loans.
- HARP was originally scheduled to terminate in June 2012. The modification has extended this program an additional 18 months, through 2013.
(3) The Major Limitation of HARP
Homeowners interested in HARP need be aware that lenders will remain free to reject a refinancing even if the homeowner meets all of the programs requirements, limiting the ultimate impact of this program.
For more information in your rights in modification, or other options including foreclosure, short sale, or bankruptcy, consider contacting a Seattle Foreclosure Attorney.
Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
at 7:30 AM