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HARP Program

We are going through a refinance and it seems that the loan officer was trying to force us into the HARP program when we didn't need or want it. It seems like there must be something in this for the bank.  Can anyone explain what the incentive is (for the banks)? 
 
My husband and I make very good livings, have no debt (other than our mortgage), we live in a very desirable area in the DC area and our house/condo is worth more than than what it was two years ago (according to the appraisal).  However, the bank then lowered our appraisal and tried to push us into the HARP program.   

Please advise.
  • June 15 2010 - Ballston-Virginia Square
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Answers (4)

Buttercup,

Often appraisals done for refinancing purposes come much higher than the true market value of the property.

Appraisals done for home buyers for financing purposes tend to be more conservative.

Needless to say, this can be very misleading and can create an unnecessary challenge for a realtor to overcome if the unrealistically high appraisal gets etched in the seller's mind - appraisals for refinancing rarely reflect market value.

 
  • June 15 2010
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Banks and lenders are being very careful in this market, and condos are considered "four letter" words, extreme caution is excersized in their valuation. It is not uncommon in this market for appraisals to be reviewed and adjusted. Opinions of value, even when done by professional appraisers, can differ.
I am sorry your appraisal issues have pushed you toward a product you do not desire. Perhaps a loan request on Zillow will allow you to find the product you prefer.
I cannot agree that appraisals for refinancing are coming in any higher than fair market value. In fact, if anything, I think most lenders would agree GETTING fair market value on a refi appraisal is an uphill battle, and with HVCC, it is shrouded in a murky fog. This seems to be what you are experiencing. I hope these comments help somehow!  Jim
  • June 16 2010
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James nailed it when it came to the appraisal...conservative is the best description for this now, especially on condos.  There are a lot of cases in which 2 appraisals have to be completed or, like you ran into, the underwriter on the file doesn't agree with the value and lowers it.

Going with the HARP is not a bad thing.  If you weren't paying PMI before and the current value the lender is using puts you over 80% LTV the HARP loan makes it so you still don't pay PMI.  Pricing is pretty much the same as a regular conventional loan, too.


  • June 16 2010
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James and Kelly,

I am NOT a lender, but as a realtor, I can tell you that I have seen in the past appraisals done for the homeowners/borrowers by their lenders, and those appraisals were much higher than the market value. Perhaps the tides are changing.   
  • June 16 2010
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