One component of the Obama administrations Making Home Affordable program is HARP, Home Affordable Refinance Program.  HARP loans enable homeowners to refinance their mortgages when they currently owe more than the home’s current value (aka an underwater, upside down mortgage, negative equity.  HARP loans help responsible borrowers reduce their monthly principal and interest payments, or build equity faster by reducing the term of their current mortgage.

Get a quote for a HARP loan here. 

Current HARP Guidelines (until March 15, 2012)

• You have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, also known as a conventional loan.  To find out if you have a qualifying loan visit the Fannie Mae or Freddie Mac loan look-up. 
• You are current on your mortgage payments and have not been more than 30 days late making a payment over the last year.
• You have a first mortgage not exceeding 125 percent of the current market value of your home.
• The refinance will lower your rate, improve cash flow, or get you out of an adjustable rate and into a fixed rate mortgage.
• You have the ability to make the new payments, and meet standard underwriting criteria. 
• You have not already refinanced through the HARP program. Your current mortgage was funded prior to June 1, 2009 or it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009

Which borrowers are ineligible for the current HARP program?

• Non Fannie Mae or Freddie Mac owned or guaranteed loans.  This includes FHA, VA, USDA, Portfolio loans, and sub-prime loans.  FHA and VA have refinance options for borrowers without equity.
• Those with late payments on their current mortgage or any applicable 2^nd mortgages in the past 12 months.
• Those loans that are currently in excess of 125% loan to value. 
• Those who do not meet underwriting requirements from an income standpoint.  This would include borrowers who originally obtained their mortgage with a stated income loan, and now cannot document sufficient income to qualify.
• Borrowers who have had a bankruptcy discharged within the past 5 years.

HARP 2.0 Enhancements effective March 15, 2012 

Elimination of the maximum of 125% LTV. 

This appears is a nice benefit for the poor folks in FL, CAL, NV, and other areas of the US where values have been shredded.  However, there are 2 glaring issues which will hopefully be addressed by November 15:  

1)       The first issue that potentially makes the removal of the 125% LTV a non factor is that there are currently HUGE adjustments (LLPA) to rate/ and or costs when your loan to value is over 100% LTV. Eliminate the these LLPA’s and eliminating the current 125% LTV max might matter.

2)       Almost every loan that’s over 125% in my market (Ohio) has PMI, and loans with PMI can only refinance with their current servicer.   This rears two more issues.  Having one option enables existing  lenders to gouge and make crappy offers to their trapped borrowers.  Trust me, from what I have seen, existing servicers lenders are abusing this power by maximizing the rates and fees.  Borrowers need to know that a broker or a wholesale lender (like me) can potentially deliver these loans at lower rates and costs, if they have a lending relationship with your current servicer. 

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.  

Excellent, I love it.  Now how about extending it to people who have had documented financial hardship that made it impossible to keep up?  Loss of employment, there’s been some of that happening over the past few years.

Offering to eliminate Loan Level Pricing Adjustments, or LLPA for borrowers who refinance into shorter-term mortgages. 

The LLPA’s currently in place have rendered the program useless to many borrowers and is the main reason the program has helped less than 10% of the eligible borrowers. Once we hear which ones, we will know how good this change is.  Eliminate the ¾% rate hike for having a 2^nd mortgage and this all starts to make sense.  Change the investment property hit to ½% in rate.  Change the credit score hits to zero, if they qualify, they qualify.  No loan to value hits.

Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac. 

This is a biggie, hopefully a game changer, as all Fannie and Freddie lenders should be now willing to participate.  What this means is that lenders who fund the loans are not taking on the risk they normally would, which was the main reason that many lenders have chosen not to participate.

Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Fannie and Freddie.

Love it, remove the obstacles, no need for an application fee.

Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Fannie Mae or Freddie Mac on or before May 31, 2009.

The problem I have with this is they aren’t allowing people who have used the program once already to use it again?  I had people use it at 5.5%. They are good borrowers, why cant they use it at 4.25%?  I dont see the harm in allowing them the get the same benefit others are getting now.

In conclusion,  I am the ultimate skeptic when it comes to the government trying to fix the mortgage crisis.  They fail to make the impact they have hoped for because their ideas are not well thought out.    There are some positive changes to this program, but its only designed to help certain folks.  

>>> 11/15/2011  For additional info on HARP and refinancing without equity:

http://ohiomortgageadvisor.com/1115-harp-2-0-loan-changes-to-making-home-affordable/

http://ohiomortgageadvisor.com/harp-loan-qas-to-the-november-15-2011-program-changes/

http://ohiomortgageadvisor.com/how-to-refinance-your-mortgage-when-you-are-upside-down-and-underwater-option-2-fha/ 

If you have questions about HARP or other refinance options feel free to contact me  here.

This event is hosted and presented by four local industry professionals to help you understand the steps involved in buying your first home. 

This event takes place on Wednesday, February 22, 2012.  Presentation from approximately 7:00- 8:15 with Q&A to follow.

SKYVIEW LODGE
336 PEARL ROAD
BRUNSWICK, OHIO

Presentation by: 

 Hosted by

Jessica Frazier
Account representative
Liberty Title

Topics covered will include:

The role of the real estate agent

Determining what is most important in selecting your first home

Establishing a budget

The loan approval process
Prequalification and pre-approval, appraisal, Obtaining a loan commitment, clearing conditions, receiving the clear to close, closing, filing and funding

Loan programs, required down payment, minimum credit scores
Conventional, FHA, FHA 203k, VA, OHFA, USDA

Credit topics
Minimum credit scores, tradelines and rent history, past credit issues, major derogatory credit.  Credit repair

Rates and closing costs
Typical closing costs and description, factors affecting rates and fees, financing closing costs/ minimum out of pocket, escrows

RSVP here with attendee name(s) and phone.

• Borrower who currently has an interest rate over 4.75%.
• Borrower who hopes or plans to move within the next 1-5 years.
• Borrower who is unsure when you may move next.
• Borrower who wants to improve household cash flow by re-amortizing to a new 30 year fixed rate mortgage.
• Borrower who wants to build equity faster by switching to a shorter term.
• Borrower who is unwilling to lose equity by “rolling in” unneccessary closing costs

FAQ

Are there really no closing costs?

In most cases you will be required to pay an application fee of $400 to pay for an appraisal up front.  This $400 will be reimbursed at closing.  Since the appraisal is a necessary part of most refinances*, and they are a 3^rd party (not affiliated with American Midwest Mortgage Corporation) we do have to pay them prior to receiving the appraisal. So I lied, but I didn’t.  There are actually many other closing costs involved in the transaction, but are paid for by my company.

What terms, types, and loan amounts can be done without closing costs?

FHA, VA, and Conventional loans over $150,000.  30, 20, and 15 year no closing cost loan can be done with FHA and VA loans.  For conventional no closing cost loans with terms of 30, 25, 20, 15, or 10 years are available.

How are my taxes and insurance handled on a no closing cost loan?

If your property taxes and home owners insurance are paid in conjunction (escrowed) with your mortgage payment, (escrowing these payments are required for FHA, VA loans, and also required for conventional loans over 80% loan to value) a new escrow account will need to be established when refinancing.

The amount required to establish the new escrow account depends upon when the next payments are due (to the county you live in for property taxes, and to your insurance company for home owners insurance).  The new escrow account will be set up so there are between 7-8 months worth of property tax payments in the account when the half year tax bill is due.  The extra 1-2 months is required to account for future shortages due to tax increases.  The escrow account is also set up so there will be a full year premium to disperse when the next insurance bill comes.

What happens to my current escrow account?

The amount in your current escrow account will be sent to you typically within 2 weeks of the current loan being paid off.  You can use that money as you wish.

What if my loan is not over $150,000, can I get a no cost refinance?

I can try, but the closer to $150,000 the lower the closing costs will be.  For lower loan amounts, title costs, filing fees, and appraisal fees may apply.  I would be happy to provide a custom quote for loans below $150k. 

What kind of borrowers or mortgages might not be able to be offered a no closing cost option?

• Cash out conventional refinances above 70% loan to value (FHA cash out is ok).
• Investment properties
• 2-4 unit properties
• Conventional refinances with credit scores below 740 (FHA minimum 640)
• Conventional refinances with subordinate financing (2^nd mortgages/ home equity loans)

Additional information about closing costs

Additional information about no closing cost loans

If you would like to know what rate can be offered with no closing costs please contact me.

*Streamline FHA refinances and some Making Home Affordable (HARP) loans do not require appraisals.

1) You do not have to use your current or original lender to get a HARP loan.

Many lenders want you to believe this is not true.   I have heard incredulous stories about getting these loans done with the largest lenders in the country. Slow service, bad rates, high closing costs.  Loans with PMI are not required to go through their current lender.   With very few exceptions the quotes you will get from your existing lender will be higher than what you can get here. 

2) If you have a 2nd mortgage against your house, you can refinance with any lender you want.  If your 2nd mortgage lender says you can only refinance the 1st mortgage with them, contact me. 

The making home affordable program was not designed this way.  It is definitely not a requirement.  If a 2nd mortgage lender was strong arming me in this fashion, I would be on the phone with my real estate attorney, and local newspaper immediately.

3) You do not have to pay points under any circumstances on a HARP loan.  If someone is telling you otherwise, turn and run away.

You should have different options presented to you prior to application.  One with the lowest rate and highest closing costs, one with regular closing costs and a regular rate, one with a higher rate and low closing costs.   I offer all owner occupied HARP loans in excess of 175k a no closing cost option.

4) Closing costs on a HARP loan can be $1,500 or less.

Borrowers taking a shorter term (25,20,15 yr fixed) will, in most cases, not need an appraisal.  Closing costs can be limited to title and escrow fees, and county filing fees.   Paying lender fees and points is completely optional, and can be done to get a lower rate.

5)  HARP rates and fees should be very close to a lenders normal rates and closing costs.  

Regardless of credit score, loan to value, and/ or the presence of 2nd mortgage: your rate should increase no more than .25%, and the closing costs should increase by only 3/4 point ($750 per 100k).  If you are refinancing to a shorter term there will be no additional fees or rate increases.

Additional posts about the Home Affordable Refinance Program:

New HARP Guidelines
HARP loan Q & A’s

The new program enhancements address several other key aspects of HARP including:

• Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
• Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
• 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.

Program Extension
The HARP program has been extended. Accordingly, lenders will now be able to originate Refi Plus and DU Refi Plus mortgage loans provided the note date is on or before December 31, 2013. Whole loans must be purchased by Fannie Mae no later than April 30, 2014 or in MBS pools with issue dates no later than April 1, 2014.

Maximum LTV Ratios and Eligible Products for Refi Plus

Fannie Mae is removing the maximum LTV ratio limit for Refi Plus mortgage loans secured by fixed-rate mortgages with terms up to 30 years. This includes loans with terms of 15 years, which were previously restricted to a maximum LTV ratio of 105%. There continue to be no limits on the CLTV or HCLTV ratios.

The maximum LTV ratio limits for all occupancy and property types are:

• No maximum for fixed-rate mortgages with terms up to 30 years,
• 105% for fixed-rate loans with terms greater than 30 years up to 40 years, and
• 105% for ARMs with initial fixed periods greater than or equal to five years and terms up to 40 years (as permitted by the ARM plan).

DU Implementation of LTV Expansion
The changes to the LTV ratio limits described above will be implemented in DU in March 2012. Until such time as DU is updated, DU loan casefiles that receive an Ineligible recommendation due to an LTV ratio above 125% will not be eligible for delivery.

Underwriting Changes

Mortgage payment history requirements:
The lender must determine that the borrower has not had any mortgage delinquencies on the existing mortgage in the most recent six month period, and no more than one 30-day delinquency in months 7 – 12. This is a change from the existing mortgage delinquency policy, which varies based on whether the borrower’s payment is increasing or decreasing.

Requalification requirements for large payment increases:
A new policy is being introduced that requires the borrower to be requalified for the new loan if there is a large payment increase. The following requirements must be met when the principal and interest payment increases by more than 20% of the current contractually obligated payment under the note
Minimum representative credit score of 620
Maximum DTI ratio of 45%
Verification of income sources and amounts in accordance with the verification of assets to close if the borrower is required to bring funds to closing.

In the event that the note provides for more than one payment option, the lender must use the lowest payment option to determine whether the increase exceeds 20%. If the borrower’s payment is increasing by 20% or less, the standard Refi Plus guidelines continue to apply.

Removal of bankruptcy and foreclosure policy:
Fannie Mae is removing the requirement that the borrower (on the new loan) meet the standard waiting period and re-establishment of credit criteria in the Selling Guide following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed

Borrower benefit requirement
To be eligible for Refi Plus and DU Refi Plus, the borrower must receive a benefit in the form of either a reduced monthly mortgage payment (principal and interest) or a more stable product, such as a move to a fixed-rate mortgage from an ARM. Fannie Mae is updating the borrower benefit criteria to also include a reduction in the interest rate or a reduction in the loan amortization term as eligible borrower benefits.

Loan-Level Price Adjustments for Refi Plus and DU Refi Plus
Fannie Mae is significantly reducing the maximum amount of loan-level price adjustments (LLPAs) that apply to “HARP” mortgage loans – loans secured by principal residences with LTV ratios greater than 80%. The following changes apply:

The cap applicable to the sum of the LLPAs and the Adverse Market Delivery Charge (AMDC) on HARP mortgage loans with amortization terms less than or equal to 20 years is being reduced to 0.00%.

The cap applicable to the sum of the LLPAs and the AMDC on HARP mortgage loans with amortization terms greater than 20 years is reduced to 0.75%.

Click for a custom HARP quote
Click here if you have a question

Custom HARP refinance quote. 

HARP Phase II Q&A’s – Taken from FHFA website

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.

Are offers from companies promising to help borrowers get HARP loans legitimate?
Borrowers do not need to use third party companies that advertise themselves as “mortgage experts” or “foreclosure specialists” to apply for a HARP loan. Before calling such companies borrowers should talk first with their mortgage lender.

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%.

Is HARP the only refinance program available to borrowers?
Our task the past few months has been to evaluate an existing program – HARP – to assess if it could be enhanced to better reach its target population of borrowers whose mortgage balances exceed the values of their homes. HARP is only one of several refinancing options available to homeowners and is unique in that it is the only refinance program that enables borrowers with little to no equity in their homes to take advantage of low interest rates and other refinancing benefits. Indeed, Fannie Mae and Freddie Mac have helped approximately nine million families refinance into a lower cost or more sustainable mortgage product since April 2009 and we will continue to work to provide those opportunities in a responsible way.

Are mortgages on condominiums eligible for refinance under HARP?
Condominiums are already eligible under HARP and, under the enhanced program, condominiums that originally met Enterprise requirements remain eligible.

What are the circumstances under which appraisals are not required?
We are further streamlining the Enterprises’ existing use of AVM (automated valuation model) estimates of properties. Where there is a reliable AVM estimate of value provided by the Enterprises, a new appraisal will not be needed. Where there is not a reliable AVM value, a new appraisal will be required.

When will these enhancements become available?
Timing will vary by mortgage lender. The Enterprises will be sending operational instructions to lenders by November 15.  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.

Are you concerned that eliminating seller and servicer representations and warrants on HARP loans will force the Enterprises to take on additional risk?
We anticipate that the package of improvements being made to HARP will reduce the Enterprises credit risk, bring greater stability to mortgage markets and reduce foreclosure risks – each of which is an important statutory mandate for FHFA.

Nearly all HARP-eligible borrowers have been paying their mortgages for more than three years, and most of those for four or more years. These are seasoned loans made to borrowers who have demonstrated a capacity and commitment to make good on their mortgage obligation through a period of severe economic stress and house price declines.

Reps and warrants protect the Enterprises from losses on defective loans; typically, such defects show up in the first few years of a mortgage and so the value of the reps and warrants decline over time. By refinancing into a lower interest rate and/or shorter term mortgage, these borrowers are recommitting to their mortgage and strengthening their household balance sheet, thereby reducing the credit risk they already pose to the Enterprises. Therefore, FHFA has concluded that eliminating the reps and warrants that may have discouraged industry participants from taking greater advantage of HARP to-date will be good for borrowers, housing markets, and the Enterprises and taxpayers.

Why are you encouraging borrowers to shorten the terms of their mortgage?
Borrowers who owe more on their mortgages than their homes are worth may be locked into their homes for years and have fewer financial options until they pay down the loan balance. A shorter term mortgage enables such borrowers to pay down the amount they owe much faster than a traditional 30-year mortgage. Furthermore, interest rates on shorter term mortgages usually are less than on thirty-year mortgages. The lower interest rate may provide borrowers the opportunity to shorten the term of their mortgages without much change in their monthly payments, and perhaps even a reduction in that payment. Such an outcome may strengthen the borrower’s financial condition and lower the credit risk for the Enterprise that owns or guarantees the loan. A few examples illustrate how this works:

Assume a homeowner currently has a mortgage on which he or she owes $200,000 and has an interest rate of 6.5 percent – a monthly payment of $1264. If the house is worth $160,000, the homeowner has a current loan-to-value (LTV) ratio of 125 percent.

If this borrower refinanced into a 30-year fixed-rate mortgage with an interest rate of 4.5 percent, the monthly payment would decline to $1013. But, by refinancing into a 30-year loan, the borrower’s loan balance will not reach $160,000 for ten full years.

If the borrower chose a 20-year loan term at a rate of 4.25 percent (mortgage rates tend to be less for shorter term mortgages), the monthly payment would be $1238 ($26 less than the borrower currently pays) and the borrower’s loan balance would reach $160,000 in five-and-one-half years.

If this same borrower refinanced into a 15 year mortgage, assuming an interest rate of 3.75 percent, the monthly payment would be $1454 ($190 more than the current payment), but the loan balance would be below $160,000 in a bit more than three-and-one-half years.

These examples are purely illustrative and are not meant to represent interest rates borrowers should expect to pay. They do show that some HARP-eligible borrowers, depending on their circumstances and priorities, may benefit from a shorter term mortgage. Since shorter term mortgages reduce credit risk to the Enterprises because of the faster repayment of principal, there will be no added fee for borrowers that choose shorter terms.
###

For additional info on HARP:
http://ohiomortgageadvisor.com/how-to-refinance-your-mortgage-when-you-are-upside-down-and-underwater-option-2-fha/

http://ohiomortgageadvisor.com/1115-harp-2-0-loan-changes-to-making-home-affordable/

Get a custom quote. If you would like to discuss this or other options available for borrowers with no equity feel free to contact me.

New guidelines for HARP

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf

Check back for commentary and analysis.

Todd L.

Contact me

10/24/11 News release from FHFA

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

For Immediate release 10/24/2011 
Corrine Russell (212) 414-6921
Stephanie Johnson (212) 414-6376

Washington, DC –

The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac (the Enterprises), 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 program enhancements were developed at FHFA’s direction with input from lenders, mortgage insurers and other industry participants.

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said FHFA Acting Director Edward J. DeMarco. “Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the Enterprises. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

Fannie Mae and Freddie Mac have helped approximately 9 million families refinance into a lower cost or more sustainable mortgage product, approximately 10 percent of those via HARP.

 HARP is unique in that it is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits. This program will continue to be available to borrowers with loans sold to the Enterprises on or before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent.

The new program enhancements address several other key aspects of HARP including:
Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
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; and
Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

An important element of these changes is the encouragement, through elimination of certain risk-based fees, for borrowers to utilize HARP to refinance into shorter-term mortgages. Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today’s low interest rates by shortening the term of their mortgage.

The Enterprises plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by November 15. Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes.

 ###

The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets and financial institutions.

For additional information about HARP and Making Home Affordable please visit these pages:
2011 HARP 2.0 program changes
How to refinance when you are underwater

The FHA streamline refinance allows a borrower to refinance their existing FHA regardless of the current value of the house.  In order to qualify for an FHA streamline your current loan must be on time, with no more than one 30 day late in the past 12 months on the current mortgage.

FHA to FHA streamline refinances will require you to come to closing with some money.   The only closing cost that can be financed is the up-front PMI insurance which is required to be paid to HUD.  Closing costs and  new escrow account must be paid at the closing.   Closing costs on an FHA streamline can be zero with by taking a slightly higher than average interest rate.  A new escrow account, properly timed, can be as little as 3 months of property taxes and home owners insurance.   Closing on an FHA streamline is best done 1 week before the end of the month, right before county property taxes are due.  In doing so, you will usually be coming to your refinance closing with less than your monthly mortgage payment.  Closing late December and late June are the best times in most Ohio counties.

Generally speaking,  any type of residential mortgage can be refinanced with an FHA loan, keeping in mind there are limits to FHA loan size.   The maximum loan to value on an FHA refinance is is 97.75%.    Thats about as close to a no equity refinance as it gets.    For borrowers who are underwater, due to having a 2nd mortgage (home equity loan or line) FHA can allows the 2nd mortgage to stay in place, provided the combined loan to value (CLTV)  remains below 125%.

If you have any questions or are interested in an FHA refinance please contact me.  

VA and USDA loans are available with no money down in Ohio.   Both programs have unique restrictions, and most will not qualify for obvious reasons.

VA Loans are, hands down, the best finance option in the country today.  If you are eligible for VA benefits, first I would like to thank you for serving our country, and I would be honored to help you with the purchase of a home.  If you are eligible for a VA loan, please visit my VA loans page, and contact me if I can be of any service to you.

The USDA loan program also requires no down payment.  USDA loans in Ohio are restricted by location, income and loan size.   For this reason, many people will need to look towards other low money down options to purchase a home.  For more information about the USDA loan program, please visit my USDA loan page, and contact me here.

The next closest option for zero down is the Ohio Housing Finance Agency (OHFA) first time homebuyer program. A 3.5% down payment is required, however 2.5% of the down payment can come from a 2.5% grant.  The 2.5% grant is only repaid under circumstances that you sell the home within 5 years. Only 1% down is required to purchase your first home with the OHFA program.

FHA is one of the most popular loan programs in the US today.  FHA requires 3.5% down, all of which is allowed to come from a family gift, if necessary.  Many people are unaware that FHA is NOT exclusively a first time homebuyer program.  Any qualifying borrower can purchase a primary residence, regardless of home many homes you have purchased in the past, and regardless of income.

If you are interested in any of these programs or have questions about them please call me at 440-666-6069, or contact me here.