Encouraging HARP 3.0 News

The Home Affordable Refinance Program failed to reach millions of underwater homeowners needing lower mortgage payments. HARP 2.0 is set to expire at the end of 2013 but the good news is that there are new talks in Washington about extending and expanding the program. Here’s the latest HARP 3.0 news to help you take advantage of today’s low refinance rates with your underwater mortgage.

Home Affordable Refinance Program Extension Eminent

Extending and expanding the Home Affordable Refinance Program (HARP 3.0) was a topic of discussion at a recent conference of the American Securitization Forum. Michael Stegman of the U.S. Treasury told conferences goers that President Obama is working to include privately held, non-Fannie Mae or Freddie Mac home loans in the government refinance program.

Privately held mortgage loans, meaning someone like Wells Fargo or Bank of America holds the mortgage instead of Fannie Mae or Freddie Mac, are the reason that millions of underwater homeowners cannot qualify under HARP 2.0. Government statistics indicate that these mortgages are responsible for nearly 2/3rd of mortgage delinquencies, a growing problem for the entire housing market.

President Obama is working with Congressional leaders on a bill but the President doesn’t necessarily need their approval to move forward as the Treasury Department already has the authority to modify many of these privately held mortgage loans, compensating investors for their losses in the process.

New HARP 3.0 Changes Promised

California Senator Barbara Boxer and Robert Mendez of New Jersey are promising (again) to sponsor new legislation in the coming weeks with similar goals for protecting lenders from losses and allowing homeowners previously left in the cold to qualify.

Along with that bit of seemingly positive news, New Jersey Senator Robert Menendez and California Senator Barbara Boxer plan to introduce new legislation this week aimed at protecting lenders from losses on refinancing privately-held underwater mortgage loans. The proposed changes would also extend HARP 3.0 for another twelve months.

There are several encouraging points to this Home Affordable Refinance Program legislation of interest to those not eligible for HARP 2.0:

  • Incentives to Increase Lender Participation
  • Allow For Non Fannie Mae and Freddie Mac Mortgage Loans
  • Eliminate The Cutoff Date of May 31st, 2009
  • Extend HARP 3.0 by Another Year

This is the kind of encouraging HARP 3.0 news underwater homeowners have been waiting for and would benefit the government by reducing delinquencies and foreclosures.

The new bill is the latest in a long list of proposed legislation, the most recent fell by the wayside as part of the fiscal cliff negotiations. Last year also saw the proposed Rebuilding American Homeownership stall and ultimately fail in Congress.

Will This HARP 3.0 Proposal be Different?

If there’s one constant in Washington it’s that Democrats and Republicans can’t agree to disagree. The longer they delay updating HARP 3.0 the more underwater mortgage holders walk away from their homes. The more Congress bickers over changes to the Home Affordable Refinance Program the less chance a bill has of reaching President Obama’s desk.

If you’d like to get involved and help HARP 3.0 become a reality sign the petition on the White House’s website.

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Home Affordable Refinance Program (HARP 3.0) Coming In 2013

The Home Affordable Refinance Program (HARP) has helped millions of homeowners take advantage of today’s lowest refinance rates while leaving millions more out in the cold. With the election in full swing it’s doubtful that changes to HARP 2.0 will materialize before 2013. Here are several changes people are hoping the New Year will bring to this government refinance program with HARP 3.0.

Home Affordable Refinance Program Update Coming

HARP 2.0 will get a refresh before the existing program is set to expire at the end of 2013. As it exists today the Home Affordable Refinance Program has three basic requirements.

In order to be HARP 2.0 eligible you must meet the following requirements AND can qualify only once:

  1. Your mortgage must be owned by Fannie Mae or Freddie Mac
  2. The government must have backed your mortgage by 6/1/2009
  3. You must have paid your last six and 11 of the last 12 payments on time

These requirements might seem easy to meet; however, almost a third of underwater homeowners have privately held mortgage loans and don’t meet the Fannie Mae or Freddie Mac requirement. If your mortgage isn’t backed by Fannie or Freddie before June 1st, 2009 there is absolutely nothing you can do to qualify.

That’s where HARP 3.0 comes in. The best thing Congress and 2013’s elected President could do is eliminate the requirement that Fannie Mae and Freddie Mac own your mortgage. With millions of HARP 2.0 ineligible homeowners paying six percent or more on their home loans the potential savings is significant.

One of the ideas behind HARP is that by allowing millions of underwater homeowners to refinance with today’s best mortgage lenders it will reduce their payments freeing up cash to stimulate the economy.

Refinance Again Under HARP 3.0?

If you qualified for mortgage refinancing under HARP 1.0 you’re probably paying somewhere near 5% for your home loan. Mortgage refinance rates are in the neighborhood of 3.5% and access to the program again offers significant savings to around a million homeowners.

Unfortunately HARP 2.0 doesn’t allow for multiple mortgage refinancing. The program is limited to one time per household AND per property. If the Home Affordable Refinance Program’s goal is free up disposable income to stimulate the economy these two changes would accomplish just that.

June 1st 2009 Fannie Mae/Freddie Mac Requirement

If HARP 3.0 doesn’t remove the Fannie Mae, Freddie Mac requirement entirely it could remove the cut-off date. This requirement was intended to limit risk for lenders by requiring government backing but the cut-off date does little more than disqualify millions of homeowners.

Ideally HARP 3.0 would allow anyone to qualify for no cash back mortgage refinancing of their home at today’s lowest refinance rates. The program already limits risks and offers enough lender incentives that they have nothing to lose.

HARP 3.0 Fees Could Bite You

If you’re eligible under HARP 2.0 or could become eligible when the program changes in 2013 watch out for lender fees. Part of the incentives used to encourage lender participation is free range when it comes to certain fees.

The more you pay closing on your new home loan the less benefit you’re getting from the lowest refinance rates. Paying more at closing for things like the loan origination fee, processing fee, application fee and rate lock fee means it’s going to take longer to break even recouping your out-of-pocket expenses.

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What To Do When Your Mortgage Refinance Application Is Denied

Are you one of the millions of homeowners in the United States that had your mortgage refinance application denied? If you are, don’t take it personally, you’re in good company. Fortunately, there are steps you can take to get approved in most situations. Here are several tips for turning that denied refinance application into an approval with today’s best mortgage lenders.

Common Reasons for Mortgage Refinance Denials

There are a number of reasons that lenders deny applications for mortgage refinancing. Lack of home equity is one of the most common reasons for having your refinance application denied. You don’t have to be fully underwater to be denied, just low on equity. If you’re not underwater but need to improve your loan-to-value ratio, consider cash-in mortgage refinancing.

Cash-in refinancing means you’re bringing cash to the table to improve your loan-to-value ratio to get your mortgage refinance application approved. I don’t recommend this if you’re fully underwater or will have to pay a significant amount as you could qualify for the Home Affordable Refinance Program (HARP 2.0) in these cases. If you only have to pay $10,000 to get approved for a conventional home loan cash-in refinancing could be a worthwhile investment.

Consider The Home Affordable Refinance Program

If your loan-to-value ratio is greater than 80 percent you could qualify for underwater refinancing with HARP 2.0. The program was recently overhauled by President Obama so if you were denied when the program was first introduced you should reapply. Under HARP 2.0 there’s no limit to how underwater you can be and there are more incentives for lenders to approve your HARP application. For many homeowners this is a more attractive alternative to cash-in refinancing.

The basic requirement for HARP is that Fannie Mae or Freddie Mac purchased your mortgage prior to June 1st 2009 and you cannot have any late payments in the last six months. Additionally, you must have made 11 of your last 12 mortgage payments on time. If you meet these basic requirements you are HARP eligible; however, many lenders enforce their own program overlays. Overlays are limits on things like minimum credit scores and maximum loan-to-value ratios to get approved. Not every mortgage lender enforces overlays and every lender’s rules are different.

FHA or VHA Mortgage Refinancing Options

If you’re low on equity consider an FHA home loan. FHA refinance rates are competitive compared to conventional mortgage rates. The downside to an FHA home loan is that you’ll be required to pay mortgage insurance which will raise your monthly payments. VA home loans on the other hand do not require mortgage insurance so if you’re a veteran don’t overlook your VA mortgage eligibility. VA home loans are the single best option available on the market today.

Bad Credit Denial? Improve Your Credit Score

If your mortgage refinance application is denied due to credit your only option is to improve your credit score. The easiest way to do this is to pay down the balances on your credit cards below 30% of your available limit. Make sure you’re making all of your payments on time and work with creditors to remove negative information from your credit reports.

If you haven’t checked your credit reports for mistakes now would be a good time to do this. You can get free copies of all three credit reports by visiting the website AnnualCreditReport.com.

Keep Applying With Different Mortgage Lenders

Mortgage lenders have different requirements for underwriting so if one denies your application there’s a good chance another one will approve you. Shopping around for the lowest fees is important as closing costs can vary significantly from one mortgage lender to the next.

The biggest lenders like Bank of America or Wells Fargo don’t always have the lowest refinance rates and fees. Smaller lenders or credit unions might approve your mortgage refinance application when the lending giants turn you down.

One last thing to consider is enlisting the help of a mortgage broker. Your broker has access to programs the average homeowner would never know about and have experience getting applications approved. Just be careful not to overpay the broker’s loan origination fee as paying too much could make refinancing an losing proposition.

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You can learn more about getting your mortgage refinance application approved and getting the best deal by checking out my free Underground Mortgage Videos.

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HARP 2.0 Application Denied?

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:

  1. You can be approved by ANY participating program lender…not just your current lender
  2. Private Mortgage Insurance will not prevent approval
  3. 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.