HARP 2.0 is supposed to open the doors to mortgage refinancing for millions of underwater homeowners. What do you do if you meet all the HARP 2.0 qualifications but your lender still denies your application? Here’s what you can do if a lender denies your mortgage refinancing application under HARP 2.0 AND keep you sanity in the process.
HARP 2.0 Disappointing Many
President Obama recently overhauled the Home Affordable Refinance Program allowing for unlimited loan-to-value ratios to get people qualified. The problem is that many homeowners with high loan-to-value ratios are finding their applications are still being denied, a slap in the face from their existing lenders.
What these homeowners are finding is that just because they fall under the program guidelines doesn’t mean the lender will approve the mortgage. If your lender turned your HARP 2.0 application down because of your LTV don’t give up on the program. This only applies to a high loan-to-value ratio, if you’re ineligible because your home loan isn’t with Fannie Mae or Freddie Mac, unfortunately you’re still out of luck.
HARP 2.0 Has Been a Struggle Since Day One
The Home Affordable Refinance Program is supposed to help seven million homeowners in the United States take advantage of today’s low refinance mortgage rates. Unfortunately the program has been flawed since its creation; even with the recent revision many homeowners for which the program was intended are still finding mortgage refinancing out of reach.
Here’s what you need to know if your HARP 2.0 application is denied:
- You can be approved by ANY participating program lender…not just your current lender
- Private Mortgage Insurance will not prevent approval
- Not all of the best mortgage lenders impose loan-to-value requirements
High loan-to-value ratios have been a problem for underwater homeowners since the housing bubble burst and this program was intended to remove this roadblock for those that need the help the most. The problem is that lenders have the option to enforce their own rules and many have set strict loan-to-value limits.
Nearly every one of the country’s mega-banks and put some form of loan-to-value limit on their in-house guidelines. Some are allowing no more than 105 percent LTV, others only up to 125 percent. Lenders like Bank of America have never made a name for themselves as being consumer focused and high LTV mortgages tend have the highest default rates.
What to do if Your Application is Denied
There is good news if you’re an underwater homeowner and your HARP 2.0 application is denied. There are lenders out there don’t impose their own loan-to-value requirements. Community based credit unions can be a gem and are an excellent starting point as these institutions tend to be more member focused and less likely to deny your application.
The most important thing you can do is not get discouraged…keep at it and you’ll find a lender willing to approve your mortgage refinance application.