HARP Enhancement - Mortgage Payment Relief At Last

Since the housing bubble burst four years ago, many Americans have suffered catastrophic declines in their home values.

Homeowners in Arizona as well as Florida, Nevada and Michigan are especially hard hit and home values have fallen as much as fifty percent. Even though today’s interest rates are at a record low, some are unable to refinance their homes or reduce their monthly mortgage payments.

To help homeowners reduce their mortgage costs through refinancing, the Departments of Treasury and Housing & Urban Development are making key changes to their Home Affordable Refinance Program (HARP).

Historically, HARP required a maximum loan-to-value (LTV) of 105% for a current mortgage or up to 125% if an existing servicer offered the program. New program enhancements effective March 17, 2012, will allow many more homeowners to take advantage of HARP and the financial relief it offers. Some loan caps will be eliminated and program requirements will be loosened for homeowners with traditional loans across the country. Jumbo loans, FHA loans and bank portfolio loans will still not qualify under HARP.

The enhanced HARP program features:

  1. No LTV caps on loan terms up to 30 years for a primary residence.
  2. No caps on combined loan-to-value (CLTV) for homeowners with a first mortgage and a home equity credit line or second mortgage. (Adjustable rate mortgages still carry a 105% LTV cap.)
  3. Lower fees for HARP loans and no add-on fees for loan terms of 20 years or less.
  4. Second homes and investment properties qualify for the HARP program.
  5. Homeowners are not required to purchase mortgage insurance if they currently do not have. If they do have mortgage insurance, they are required to continue coverage.
  6. No appraisals required; lenders run an “automated valuation model” to assess home values. (In rare cases, lenders may choose to order physical appraisals.)

To qualify for a HARP program, homeowners must have a loan that was purchased by Fannie Mae or Freddie Mac on or before June 1, 2009. Your current loan servicer should be able to confirm this for you.

To qualify for a HARP loan:

  1. You must have no late mortgage payments in the past six months and no more than one late payment in the past 12 months.
  2. You must have no previous use of the HARP program.
  3. You must qualify for a loan based on employment, credit and assets. If relying on the income from a second job, there can be no employment gaps for that job in the last 12 months.
  4. You must show two months of mortgage payment reserves for second homes and six months of reserves for investment properties.

If you are in Arizona and would like my help in exploring your HARP eligibility, please let us know.

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantages of these changes. If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking these links to their websites.

Jay Luber, founder and president of Galaxy Lending Group LLC, is a mortgage industry veteran with 25 years of residential lending experience