Today the Federal government announced plans to help “responsible” homeowners who thus far have been unable to refinance their current mortgage loans. The new plan is an upgraded version of HARP (Home Affordable Refinance Program). For example, the new program will allow homeowners to refinance who are more than 25% “under water” on their loans. Here are the key elements that are changing from the previous HARP guidelines:
- Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers
- Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac
- Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac
- Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate
- Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to Fannie Mae or Freddie Mac on or before May 31, 2009
These changes should really encourage borrowers to utilize HARP and refinance with today’s low interest rates. The program is for “responsible” homeowners who have not missed any recent mortgage payments. (If you have missed recent mortgage payments, you may qualify for the HAFA program or other loan re-modification options with your current lender.) Mortgage lenders will be learning all the new details of the program over the next 3 weeks, and as of November 15th you should be able to take advantage of the new HARP program.
Note that industry participation is not mandatory, so not all lenders will be able to assist you with a HARP refinance. This is one reason many people have not taken advantage of the HARP program. In the Madison area, you can contact a mortgage lender at Monona State Bank (www.mononabank.com, 608-223-2181) to see if you qualify for a refinance through the HARP program. Click here to see the list of HARP participating lenders in Wisconsin.
- The existing mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. (NOTE: Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to: http://www.FannieMae.com/loanlookup/ or calling 800-7FANNIE (8 am to 8 pm ET), https://ww3.FreddieMac.com/corporate/)
- The program will continue to be available for loans with LTVs above 80 percent.
- Borrowers must be current on their mortgage payments with no late payment in the past six month and no more than one late payment in the past 12 months.
- For more information, contact your mortgage consultant, or check out these resources: