HARP II-02-14-2012

The HARP II Refinance Program (Home Affordable Refinance Program) is designed to help people with conventional loans take advantage of today's lower rates. NOTHING is perfect but this looks like the best of the refi programs pushed by the Government (yes; it would be better if they just stayed out of the way but, it’s there, so let’s help some people benefit from it). Here’s a summary (see the red print below-- MAJOR improvements are coming in March):

>> This is for conventional loans ONLY that are owned by Fannie Mae or Freddie Mac. <<

Ø The current loan must have closed Mid-May, 2009 or before (it’s tough to put an exact date on it because the loan has to have been put into a Mortgage Backed Security Pool prior to 06/01/2009). Here’s how to find out if this includes your loan:

o Fannie Mae Look up http://www.fanniemae.com/loanlookup/ or 1-800-7FANNIE (check here 1^st since Fannie owns a lot more Mortgages)

o Freddie Mac Look up https://ww3.freddiemac.com/corporate/ or 1-800FREDDIE

o If you or a home owner don’t find your loan here, then the loan is not eligible for HARP II.

Ø The loan must be current now and paid on time for the last 6-months. You also cannot have been more than 30-days past due more than once in the last 12-months.

Ø This program was designed for people who have LTV’s (Loan-To-Value) of 80% or greater! This loan IS available for people who had as little as 3% down. In the past, the loans with PMI were too complicated to get approved through the original HARP Program.

o There is no limit on the LTV ratio.

Ø But, this is also where the program takes a questionable turn.

o CURRENTLY, if the LTV is greater than 105%, the home owner may be very limited in lenders through whom they can refinance. They may only have their current Servicer to work with, so the deal may be less appealing versus the open market, but it could still save home owner’s thousands of dollars over the life of their loan by refinancing under HARP II now; however, there should be MAJOR improvements to this in March:

o The Program loosens criteria for debt-to-income ratios, credit scores, previous Bankruptcies (This does not mean it’s a guaranty, though)…

o You may still qualify if you are currently unemployed, retired or in some way your income is not near where it was when you originally obtained the loan.

Ø You may also qualify if you have since gotten divorced and need to remove your ex-spouse.

Ø If your current loan doesn’t have PMI but the new LTV would exceed 80%, NO PMI will be required.

Ø A new appraisal may not even be required.

Ø Available for owner occupied, 2^nd homes, investment properties and condos.

Ø No cash-out or consolidations are allowed.

As I mentioned, many of the very loosened rules (i.e. LTV greater than 105%, PMI, debt-to-income ratios…) CURRENTLY are going to be limited to the really big Mortgage Servicers. For some reason, the current Administration seems to be feeding big companies more business even though it reduces competition, thus reducing the value of the deal.

The best approach, in my opinion, is to check with Fannie/Freddie 1^st to see who/if they own the loan, and then call your favorite Loan Officer. If your LO can help, you're likely to get the best deal. If you have the strict limitation of having to deal with your current Mortgage Servicer, then the deal may not be as good, but it may still be better than where you are today. Or …

… MAJOR improvements will be released in March when the government updates their automated underwriting system. This should free up more lenders to help more home owner’s instead of being strictly limited to their current Mortgage Servicer.

When in doubt, call your Loan Officer for some guidance. At the least, they can put you on their quick follow-up list when the government finally gets around to updating their underwriting system in March.

Call me if there is anything I can do to help.

Good Luck!

Jim Cook

(216) 401-1717