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11/11/2012 - HARP 2.0 Mortgage Refinance Plan - Update 5

After several false starts we were finally able to refinance our condo unit.

As advertised, HARP 2.0 is supposed to make it easy to refinance a primary residence if your mortgage is held by Fannie Mae or Freddie Mac and you have a good payment history in the past 12 months.

But the devil is in the details in how the individual service processors ( the folks you send your mortgage payments to) and independent mortgage brokers add their own additional rules.

In our case for example, the best rate our service processor would give us was 4.5%. And not for any other reason than they had the inside track on the loan and thought they could get us to pay that much. As for the independent mortgage brokers, most that we tried to deal with would not offer to refinance a condo with more that 10% of the units owned by a single investor.

The good news is that there are people out there that can refinance Green Cay Village condos and at a decent rate e.g. our new rate is 3.625%. So if you are interested in refinancing and meet the HARP 2.0 guidelines, I recommend you call Travis Dungca, the man who got the job done for us in just 1 and 1/2 months and with the final signing of the documents right in our own home.

Travis Dungca - Loan Officer - NMLS# 870187

New American Funding
14511 Myford Road, Suite 100
Tustin, CA 92780

Direct: 800.450.2010 x7107
Direct: 949.271.0455
Fax: 949.748.4959
Email: travis.dungca@nafinc.com
Web: www.newamericanfunding.com

BBB Rating A+

Previously on 12/24/2011

While it may seem like nothing is happening with the Home Affordable Refinance Program (HARP), the first quarter of 2012 should provide an opportunity for many homeowners who are current with their mortgage payments to refinance their mortgages.

Why the optimism? Three reasons.

1. Loans that are underwater by more than 25% will become eligible for refinancing under HARP 2.0 in the first quarter of 2012 as originally announced on 10/24/2011.

2. The Enterprises (Fannie Mae and Freddie Mac) are loosening their rules for refinancing. Fannie Mae for example recently eliminated the requirement that the lender determine if the borrower has a reasonable ability to repay the mortgage. Their assumption is that, however a borrower has been making their payments, they will be more likely to make their future payments if they are paying lower monthly payments.

3. Mortgage rates are flirting with all time lows of near 4% for 30 year fixed rate mortgages. And with the Federal Reserve's plan to continue to purchase long term securities as short term securities are retired, it is reasonable to expect that low rates will continue to be available for all of 2012.

As for how to refinance your mortgage, your first step should be to contact your mortgage service provider i.e. the folks you send your monthly payments too. And when you do contact them, you should expect them to be interested in working with you because HARP 2.0, unlike other programs in the past, is a good, low risk financial opportunity for them. If they are not interested in working with you, Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program.

Previously on 10/24/2011

The Federal Housing Finance Agency today announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their home mortgage.

The key change is that eligible homeowners will be able to refinance their mortgages no matter how far under water they are on their mortgage.

Program Highlights:

  • Removing the current 125 percent loan-to-value (LTV) ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac.

    For example, if you have a mortgage for $200,000 but your home is only worth $100,000 your LTV is 200%  but you are now still eligible to refinance your loan.

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers. 
     
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac.
     
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises.
     
  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Borrower Eligibility:

  • The existing mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.

    Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:

    Fannie Mae or calling 800-7FANNIE (8 am to 8 pm ET)

    Freddie Mac or calling 800-FREDDIE (8 am to 8 pm ET)
     
  • Borrowers must be current on their mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.

  • 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%.

    For example, if your loan is for $50,000 your home can not be worth more than $62,500 i.e. your home can not be worth a lot more than the amount of your mortgage. For most people in Green Cay Village, this should not be a problem.

Program Implementation:

The first step is for the borrower to learn if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac. If the mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, you should contact your existing lender or any other mortgage lender offering HARP refinances.

However, Timing will vary by mortgage lender. The Enterprises will be sending operational instructions to lenders by November 15th. Some lenders may be able to accommodate mortgage applications under some of the enhancements by December 1 while it could take other lenders additional time to incorporate the expanded program into their systems. In addition, some of the enhancements such as delivery of loans with LTV greater than 125 should be operational during the first quarter of 2012.

Source - FHFA Web Site Announcement Letter 10/24/2011

Note: The industry's four largest mortgage servicers all say they will be taking part in the revamped HARP: Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program.

Previously on 9/15/2011

Infuriated by the Obama administration’s handling of the lingering foreclosure crisis, several leading House Democrats this week suggested that Edward DeMarco should step down as the chief regulator of Fannie Mae and Freddie Mac.

DeMarco, acting director of the Federal Housing Finance Agency (FHFA) — an agency independent of the White House — met Thursday with 17 House Democrats in the Capitol, ostensibly to brief them on FHFA’s enhanced efforts to help struggling homeowners. Instead, he revealed that the agency doesn’t yet have such a plan.

In a brief news release Thursday, DeMarco vowed to bolster the administration’s two-year-old foreclosure-prevention initiative — the Home Affordable Refinance Program (HARP) — by “working hard with other market participants to enhance [the program.]”

“I understand their deep concerns for the problems in the housing market affecting their constituents,” DeMarco said of his Democratic critics. “Our goal is to provide expanded refinance opportunities for all HARP-eligible homeowners and for the changes to have a meaningful impact. We expect to complete our work by the end of this month.”

DeMarco, told the lawmakers that FHFA will take several concrete steps to help struggling homeowners, including raising the loan-to-value ratio for determining HARP eligibility and reconsidering the fees charged to homeowners who refinance.

But the Democrats are already warning that FHFA’s fix will be insufficient, estimating that it will help between 600,000 and 1 million homeowners refinance to take advantage of historically low interest rates — a fraction of the millions of consumers who are underwater on their mortgages.

The Democrats’ next step will be to ask President Obama for a meeting with “the highest-ranking housing officials in the administration” — including Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan — “to discuss these issues in a much more comprehensive way."

Source - The Hill 10/6/2011

Previously on 9/9/2011

In the address by the President to a Joint Session of Congress on 9/8/2011 the President said the following.

"And to help responsible homeowners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent. That’s a step -- (applause) -- I know you guys must be for this, because that’s a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices. "

And from the fact sheet that accompanied the address;

"Helping More Americans Refinance Mortgages at Today’s Historically Low Interest Rates: The President has instructed his economic team to work with Fannie Mae and Freddie Mac, their regulator the FHFA, major lenders and industry leaders to remove the barriers that exist in the current refinancing program (HARP) to help more borrowers benefit from today’s historically low interest rates. This has the potential to not only help these borrowers, but their communities and the American taxpayer, by keeping borrowers in their homes and reducing risk to Fannie Mae and Freddie Mac."

But none of this is mentioned in the full text of the American Jobs Act of 2011 that the president sent to congress, because implementing the changes required to reduce the barriers to refinancing does not require congressional approval.

On one hand that is good because Congress doesn't seem capable of getting much done these days (my opinion). On the other hand, expecting "the economic team to work with Fannie Mae and Freddie Mac, their regulator the FHFA, major lenders and industry leaders to remove the barriers" doesn't sound very encouraging to me either, because each of these groups has their own turf and needs to protect.

So I'm expecting a lot of foot dragging by these entities as they continue to collect higher monthly payments each month that they manage to avoid doing anything.

Previously on 8/25/2011

Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.

Exactly how a refinancing plan might work is still under discussion. It is unclear, for example, whether people who are delinquent on their mortgages would be eligible or whether lenders would administer it.

The idea is appealing because it would not necessarily require Congressional action. And a mass refinancing plan would spread the benefits of the Federal Reserve’s most important economic policy response, low interest rates, to more people.

The government has already encouraged some refinancing through the Federal Housing Administration and through Fannie and Freddie, but participation is limited. For example, the Home Affordable Refinance Program excludes homeowners who owe more than 125 percent of the value of their house. To spur more refinancing, the government may decide to encourage Fannie and Freddie to lift such restrictions.

But government officials cautioned that Fannie and Freddie do not do the administration’s bidding, even though they are essentially owned by taxpayers.


Peter Schulz - Editor - Email TCM

 
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