On November 15th, 2011, Fannie Mae and Freddie Mac released guidelines for the Home Affordable Refinance Program (HARP). This comes less than a month after the October 24th announcement by The Federal Housing Finance Agency (FHFA) about expanding HARP.
The goal of expanding HARP in the new guidelines is to allow more borrowers who are behind on their home loans or who have little equity to be able to refinance at today’s low interest rates. Fannie Mae and Freddie Mac hope that this will:
- Stabilize the housing market. A market that have seen frustration for a long time
- Boost the economy by putting extra spending money in the pockets of consumers who are likely to spend them.
HARP BENEFITS FOR QUALIFIED HOMEOWNERS
- Homeowners can refinance from now through December 31, 2013.
- No maximum Loan to Value LTV is required (this applies to all homeowners refinancing into a fixed rate mortgage).
- Homeowners refinancing into an adjustable rate mortgage can go up to a maximum LTV of 105%.
- Appraisal is not required as long as an automated value can be determined.
At Tricont Mortgage, we are optimistic that these benefits will bring the much awaited relief to our borrowers. However, we are waiting for clarity on how the new HARP program will be implemented. The Fannie Mae and Freddie Mac November 15 announcements offer more encouragement for all borrowers with low to no equity on their homes.
There are approximately 4 million Fannie Mae and Freddie Mac borrowers with mortgages larger than today’s market values for their homes. Across the country, there are about 11 million homeowners or about 22.5% of all outstanding loans who have fallen behind on their loans, according to CoreLogic, a data provider to mortgage underwriters. Of these, about 2.4 million hold less than 5% equity in their homes.
WHAT IS HARP?
HARP is a Federal Housing Finance Agency (FHFA) program that allows homeowners facing difficulties refinancing their mortgage through conventional methods to apply for a refinance of their mortgage. Homeowners that are current with their monthly payments but are unable to refinance because of a drop in the market value of their homes are the ideal candidates for HARP program. HARP goal is to allow a homeowner to refinance their mortgage into a lower interest rate and monthly payment.
HARP ELIGIBILITY GUIDELINES:
- The loan must be owned or guaranteed by Fannie Mae or Freddie Mac
- The loan was sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The loan was not refinanced under HARP previously, unless it is a Fannie Mae loan that was refinanced under HARP from March through May, 2009.
- The loan’s current loan-to-value (LTV) is greater than 80%.
- There is no loan-to-value cap in the new HARP for fixed-rate loans. Previous cap/limit was 125%. Fixed Rate refinance borrowers can now go beyond 125%. LTV
- Loan on borrower’s property must be owned or guaranteed by Fannie Mae or Freddie Mac. Call us if you are not sure who own or is guaranteeing your mortgage (803) 317-2500
- Borrowers must be current on their mortgage monthly payments at time of application. They can have one 30-day late payment in the past 12 months, as long as it is not within the last 6 months before application.
- Borrowers must have a reasonable ability to pay the new mortgage monthly payments.
- The refinance must improve the borrower’s long-term affordability or stability of the loan.
For details on this and/or other mortgage loan types, refinancing, blog posts, please visit us @ Tricont Mortgage www.tricontmortgage.com, Tricont Buzz www.tricontbuzz.com, Tricont Post www.tricont.posterous.com Tricont Blog www.tricontblog.com and Tricont Mortgage Blog www.tricontmortgage.blogspot.com before closing on your purchase or refinance mortgage loan.
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