Prefer to talk in person? Find a mortgage specialist on Zillow
Profile picture for user4664491

HARP 2.0 Denied due to "credit enhancement"

I was so excited to finally be able to refinance my 185% underwater mortgage with HARP 2.0.  I was shocked when it came back ineligible when the lender used DU REFI PLUS and they even called FNMA.  No concrete explanation was given.  I contacted another B/D and he ran numbers and I think some of his colleagues spoke with FNMA.  No concrete explanation was given.  I called my servicer (Seterus) and FNMA and I am finally told that my loan has "credit enhancement" and it is not eligible.  I learned that "credit enhancement" is something the lender and FNMA agree to and has nothing to do with my A/A+ credit rating, consistent never late payments, good income etc.  So why won't they HARP 2.0 refinance my home?  Because they are allowed to exclude it.  This makes no sense to me! 

Has anyone ran into this and what can we do about it?
  • May 16 2012 - Waterford
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (21)

this is a known issue and unfortunately you won't be able to refinance with the enhancement on your loan, even though you had nothing to do with that decision. Harp guidelines are frequently changing and each change tends to open a few more doors. Only advice is to keep an eye on guideline updates and maybe one day it will open up to allow your loan to be eligible. For example last year around September Freddie opened eligibility to certain loans with certain enhancements so these type of changes might one day help you.
  • May 16 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for gcgirl

The same thing has happened to me.  I am so frustrated by this process.  I have applied for HARP 2.0 refi with 3 different lenders.  All have denied my HARP Refi due to approved/ineligible from Fannie Mae or some other unstated reason even though they mentioned I was a strong candidate.  It was only until the 3rd lender (Wells Fargo), that I found out a credit enhancement was attached to my loan when it was sold to FNMA.  When I called my lender (Navy Federal CU) to inquire, they denied this.  When I asked them to put this in writing, they hesitated and said they would put in a request for it but did not know if a letter would be provided.   I doubt I will ever get anything in writing.  I am so angry about this, and all the time I have had to take to apply and go through the loan process.  I was told to keep trying with different lender, but this is ridiculous.  By the way, I meet all guidelines, have strong credit rating, and no late payments.  In essence, those of us who are making consistent payments, on time, with strong credit are being punished for some stupid agreement or whatever between lender and FNMA!  I am going into letter writing mode very soon...starting with Navy Federal, FNMA, Federal Housing Finance Agency, and Congressman/Congresswoman!

  • September 13 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for jpallack
The exact same thing just happened to my wife and I.  A+ credit ratings, never a late payment on anything.  We had no idea how this was attached to our loan or the implications it would have.  We were finally excited to be able to refinance our condo after years of being shot down, only to be excluded yet again. Once again for the people who pay their mortgages there are no real programs to help you out.
  • November 27 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Once again for the people who pay their mortgages there are no real programs to help you out.
================================
an irresponsible statement. Perhaps you weren't able to be helped however it is flawed logic to then assume that no one who makes their mortgage payments can be helped.

HARP/FMRRP,VA IRRRL and FHA streamline refinance have been helping many people.

Navy Credit Union had their own quasi-conventional loans that they sold to Fannie; however they certainly did have credit enhancements. 
  • November 27 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

BIG FYI - Fannie Mae recently issued an update (October 11, 2012) to the Desktop underwriting software that now addresses the "credit enhancement issue" in HARP applications.  Fannie Mae is asking those of us they were denied originally because of this enhancement issue to try again. Here is the update they sent out:https://www.fanniemae.com/content/announcement/sel1211.pdf

We did resubmit, were approved this time through the fannie mae system and should be closing within the next week at a very low interest rate.  Several of our friends are also now finding success as well since the update.  The only catch is that because the credit enhancement was essentially "Investor paid MI" on our loans, you have to cover the same lever of coverage as "borrower paid" which to us means $17.52 extra a month in MI, however we will be saving over $450 a month just from the reduced interest rate.  The good new is that the MI drops off when your are at 80% LTV.  We are in AZ and would be happy to share our loan officer with anyone who is interested as they are now prepared to work through this credit enhancement issue. Good Luck everyone.
  • December 03 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for user58957842
Daniel Did you go with your current provider or another provider?
  • December 05 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for jpallack
@ "Norm D. Plume" it's not an irresponsible statement, there are thousands of people who make payments who are currently being denied refinanacing for no faults of their own.  However I doubt it's worth arguing with someone like yourself.
  • December 06 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

user58957842 "Daniel Did you go with your current provider or another provider?"

We had to go with a totally new provider. Our current provider is Seterus who doesn't do loans they are just a processor so HARP was not even an option for them.
  • December 06 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for jpallack
Who did you use Daniel-San?
  • December 06 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

We used W.J. Bradley here in AZ
  • December 10 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Go Huskers
"@ "Norm D. Plume" it's not an irresponsible statement, there are thousands of people who make payments who are currently being denied refinanacing for no faults of their own."
-----
What you just said is not what you originally said. Your first statement was in fact irresponsible and inaccurate. 

To refresh your memory, you said: 
"Once again for the people who pay their mortgages there are no real programs to help you out."

That's different than:
"there are thousands of people who make payments who are currently being denied refinanacing for no faults of their own."

The first statement is clearly untrue since many who pay their mortgages have benefited from a host of programs as Norm has already pointed out. If even one person who paid there mortgage was able to refinance it would make your statement false. 

Your revised second statement may or may not be true, but that's not what you said originally and not what Norm commented on. If you want to "argue," at least make sure you don't change your story in the middle of it and pretend to be right.
  • December 10 2012
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for jpallack
Perhaps you should go back to the cornfields and hide behind some fake internet profile.
  • December 13 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I just had a client call me that had the same credit enhancement issue over the last year in trying to refinance under HARP.  I was able to get her and approve/eligible. So it looks like Fannie has updated the automated underwriting system.

In regards to the PMI, your should only have to pay the PMI you are currently paying. If you have lender paid PMI, you shouldn't have an adjustment to the interest rate or payment. 
  • December 13 2012
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Go Huskers
"Perhaps you should go back to the cornfields and hide behind some fake internet profile."
----
Perhaps you should go create some more fake internet reviews. I'd be willing to bet my profile is more real than yours is.
  • December 13 2012
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I am a Mortgage Specialist and we specialize in the HARP (2.0).  I had a customer come to me who has his mortgage with Seterus and he was turned down for the HARP due to the credit enhancement.  I spoke to Fannie Mae and they explained what the credit enhancement was and why it disqualified someone from HARP.  A credit enhancement is simply LPMI (Lender Paid Mortgage Insurance), which is PMI built in to the rate of a mortgage.
 
There are changes within Fannie Mae now that allow us to refinance customers with credit enhancements on HARP.  Most lenders still have overlays which do not allow this, but we don't.  Let me know if you have any questions.

Steve Nardin
[Contact information removed by Zillow moderator. Please see our Good Neighbor Policy for more information.]
  • January 23 2013
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for user3153850
I was just told my credit enhancement rejection was not due to LPMI apparently NFCU retained 20% of the loan and financed the 80% through Fannie may.  I'm at a loss of where to proceed from here.
  • April 26 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Has anyone tried running your file back through FNMA's DU system recently? With FNMA's changes at the end of 2012 you may be now qualified for HARP 2.0. 
  • April 28 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for user3153850
Mine was very recent less than a week
  • April 28 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I am a Mortgage officer, I hae seen this before.  A few times we have been able to get around this on a some of our lines, as a direct lender and broker we have access to a wide array of programs.  Many times it will really depend on the investor you are using.  I had one  I was doign for a client that the MI was held by CalHFA and they were not participating.  we hounded them for 4 months going through every contact.  With enough pressure from several clients probably calling them they have made some slight adjustments and the loan  was done.  Also doing unlimited LTV on Fannie and Freddie.  Please contact me on your scenario and we can run through our multiple engines and see what we can do.  our investors are constantly changing guidelines and some updates were released on HARP last week, also HARP 3.0 is in the works for being updated to help many who don t fit now!
  • April 29 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Yes, a "Credit Enhancement" is simply LPMI (Lender Paid Mortgage Insurance) that your Loan Officer put on your loan when you took it out.  Most are not aware they even have this but it is an option that some Mortgage Companies or Banks will put on your mortgage because they think the word (PMI) might chase customers away.  Basically LPMI is where the par rate is increased instead of having Mortgage Insurance(PMI) separately.  I bet you either did not have quite 20% equity when you last refinanced or less than 20% down when you bought the house, is that accurate?

Even though Fannie Mae / Freddie Mac recently changed this guideline to now allow LPMI loans to be refinanced through HARP, most Lenders have implemented "Lender Overlays" and do not offer this.  Some may even lead you to believe that you don't qualify when in fact, they simply do not offer the program.

For additional questions feel free to send them to me at: <Removed by Zillow Moderator. Please see Good Neighbor Policy>
 
  • June 04 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for user7050506
We are waiting for a program that will encompass non Fannie & Freddie properties to refinance our residence, but for those of you that are going to try to re-submit for the HARP 2, I can tell you that if anyone can push it through, Steve Nardin (who commented above) can. We have used his services several times over the past two years to refinance rentals under the HARP program and he was instrumental to our success. I know it is frustrating, but it might be worth another shot with a new lender. Good luck!
  • June 04 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.