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The Making Home Affordable Program

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President Obama’s Home Affordable Refinance Program continues to evolve to make more homeowners eligible; however, many banks are still playing by their own rules. The Making Home Affordable refinance program was part of the 2009 stimulus package and was intended to help millions of underwater homeowners take advantage of today’s low refinance mortgage rates.

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While the program looks great on paper banks and mortgage lenders have been hesitant to adopt HARP guidelines as the government intended. Most lenders are enforcing their own Loan-to-Value requirements ranging from 105-125 percent even though HARP 2.0 removes the LTV requirement.

Many homeowners are finding out the hard way that just because you’re qualified under the Home Affordable Refinance Program guidelines finding a lender to approve you can be difficult. Don’t worry, if you’ve been turned down for your HARP refinance there are options available to you.

HARP 2.0 & The Making Home Affordable Program

The Home Affordable Refinance Program (HARP) is a subsection of the Home Affordable Refinance Program. This program was supposed to help seven million underwater homeowners lower their payments with today’s low refinance rates. The goal is to boost the economy by stimulating spending by homeowners with lower mortgage payments.

The problem with HARP is that mortgage underwriting standards enforced by banks and lenders restrict the number of applicants being approved. In its original form the Making Home Affordable program helped fewer than one million underwater homeowners.

HARP 2.0 came along at the end of 2011 and removed the original 125% loan-to-value requirement. The intent was to reach the six million homeowners left out the original Making Home Affordable Program.

While the government refinance program guidelines have been greatly relaxed under HARP 2.0, not many banks and lenders have adopted the government’s guidelines, especially when it comes to loan-to-value, which has resulted in the latest tweak to the Making Home Affordable Program.

HARP 2.0 With a Side of Private Mortgage Insurance

Under the original Making Home Affordable Program if you had Private Mortgage Insurance (PMI) you were most likely denied refinancing. It didn’t matter if you had borrower-paid PMI or LPMI (Lender Paid Private Mortgage Insurance); if you had PMI your HARP refinance never made it to closing.

HARP 2.0 smashes the PMI barrier which means you should be able to refinance if Private Mortgage Insurance held you back in the past. While it’s true banks and mortgage lenders are still playing by their own rules when it comes to the Making Home Affordable Program, loan-to-value, and PMI, there are lenders out there that will approve your application with PMI or LPMI.

If your HARP application is denied due to PMI or your loan-to-value ratio, try reapplying with a different lender.

Community-based credit unions are an excellent starting point when shopping for HARP approval. If you get turned down for the Making Home Affordable refinance program, don’t give up. Keep applying and you will find banks and lenders willing to approve your HARP 2.0 application.

HARP 2.5 In The Works?

Rumors of HARP 3.0 seem to be left behind as members of the Senate are working to draft the Responsible Homeowner Act of 2012. This proposed legislation allows homeowners backed by Fannie Mae or Freddie Mac to essentially streamline refinance their homes. FHA homeowners have had the streamline refinance option available for years, allowing them to refinance without a home appraisal, verifying employment or documenting income.

The HARP 3.0 rumors offered a glimmer of home for homeowners with non-Fannie and Freddie backed mortgages but the proposed legislation appears to retain the requirement. Whatever form the Responsible Homeowner Act of 2012 ultimately takes the bill is a long way from being approved in the House and the Senate and being signed into law by the President. Stay tuned for more news about HARP 2.0, 2,5 and the Responsible Homeowner Act.

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