HARP 2 – What Does it Mean to me?

Recently, the Obama administration announced the initiation of the HARP 2 program in a further attempt to assist recovery for the mortgage and housing industry.  The original HARP (Home Affordable Refinance Program) was released in 2009, but dictated many requirements that limited actual impact on those borrowers in the worst markets.   HARP 2 is an attempt to rectify these limits . 

How is HARP 2 different than HARP?  

- Most importantly, there is no Loan to Value Cap associated with a fixed rate mortgage under the new HARP 2.  In essence, if your home is upside down by 50%, 100% or even 300%, you are still eligible for the HARP 2. If you determine to refinance into an ARM (Adjustable Rate Mortgage) under the HARP 2 a 105% Loan to Value Cap is enforced. 

- Appraisals will not be required with the HARP 2.

- Loan fees associated with the HARP 2 have been significantly reduced and in some circumstances eliminated.

- The current loan cannot be financed for more than 80% of the current value of the house.  Simply, this loan relief is not intended to assist those that were not affected by the housing crisis.

- If the current loan does not include Mortgage Insurance, you will not be required to obtain it with the new loan.  Additionally, if your current loan has PMI, the new loan under HARP 2 will include it.

- Eligible properties include single family homes, condos, and multiple unit dwellings that are primary residences and single family homes, condos and multiple unit dwellings that are investment properties.

- Income and asset requirements are minimal and oftentimes simply require paystub and employment verification.

What didn’t HARP 2 change that could still limit my eligibility?

- VA Loans are not eligible for refinancing under HARP 2.  For information about refinancing opportunities for VA loans, review VA's IRRRL program (Interest Rate Reduction Refinancing Loan) at benefits.va.gov 

- Only loans owned by Fannie Mae or Freddie Mac are eligible for HARP 2.  Please note, many banks "service" loans that are owned by Freddie and Fannie.  Wells Fargo and Bank of America are amongst major banks that service Freddie and Fannie Loans. Loans that are serviced by other lenders, but still owned by Freddie or Fannie are eligible.   You can check your loan at: http://www.fanniemae.com/loanlookup/ and https://sf.freddiemac.com/   

- The current loan must have been sold to Fannie or Freddie before May 31, 2009.   

- Loan payments must be current and on time for the last six months.    

- Applications for the HARP 2 program were accepted beginning December 1, 2011.  If the current Loan to Value Ration is over 125%, you must wait until March 18, 2012 to apply.  You can apply with any lender, even if it is not the current lender.