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New Hope for Underwater Homeowners!

FHFA, Fannie Mae and Freddie Mac Announce HARP
Changes to Reach More Borrowers

Why are you making these changes to HARP now?

For some time, FHFA, Fannie Mae and Freddie Mac (the Enterprises), lenders, servicers and private mortgage insurers (MI’s) have been engaged in a coordinated, industry-wide effort to find ways to increase the number of homeowners who are able to refinance through HARP. With mortgage interest rates at historic lows, we believe it is an opportune time to put the industry’s experience with the program to work so more eligible borrowers can refinance Fannie Mae or Freddie Mac-owned mortgages. Importantly, such refinances bring benefits to borrowers, to housing markets, and to the Enterprises and taxpayers.

Which borrowers may be eligible for an enhanced HARP?

In general, borrowers must meet the following criteria:

  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

Given the eligibility criteria, can you estimate how many borrowers may refinance through HARP as a result of these changes?

For many reasons it is very difficult to project the number of mortgages that may be refinanced under the enhancements to HARP, including the future path of interest rates, borrower willingness to undertake a refinance transaction and the number of lenders and servicers who choose to offer the program. Given current market interest rates, our best estimate is that by the end of 2013 HARP refinances may roughly double or more from their current amount but such forward-looking projections are inherently uncertain. The more important point is that material changes have been made to enhance access to the program but HARP, before and with these changes, is not intended to serve all borrowers, or even all underwater borrowers. It is targeted just at borrowers with loans owned or guaranteed by the Enterprises that meet the eligibility requirements set forth above.

What about borrowers whose loans are not owned or guaranteed by Freddie Mac or Fannie Mae?

Neither FHFA nor the Enterprises have the legal authority to extend HARP to borrowers whose mortgages are not owned or guaranteed by Fannie Mae or Freddie Mac.

What do borrowers need to do to take advantage of HARP?

The first step is for the borrower to learn if his or her mortgage is owned or guaranteed by Freddie Mac or Fannie Mae by visiting the Enterprises’ websites. Each Enterprise has a web tool for that purpose. If the mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, the borrower should contact his or her existing lender or any other mortgage lender offering HARP refinances.

 Is there a maximum loan-to-value (LTV) ratio for HARP?

There is no longer a maximum LTV limit for borrower eligibility. If the borrower refinances under HARP and their new loan is a fixed rate mortgage, there is no maximum LTV. If the borrower refinances under HARP and their new loan is an adjustable rate mortgage, their LTV may not be above 105%.

For more information and to see if you qualify fill out the form below and Kevin from Summit Funding will contact you and let you know. [download id=”4″]