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Profile picture for pvolkman1

Harp refinance problems

Last year I called my mortgage company, MetLife, to see if could be eligible for HARP.  I was told that I fit all the categories, and they would look into it.  I received a phone call a couple of days later saying that I was not eligible only because my loan was a No Doc loan.  Which was unfortunate because I was talked into that loan because I have a great credit record and had 20% down.  My loan is a little over three years old and is at 6%
 After hearing about changes to HARP I recently decided to call MetLife again and see if anything had changed with my situation.  When I called this time I was told that they are no longer doing anything with the loans they have.  They are not refinancing and won't even look at HARP eligibility and that I would have to look at another company in order to get HARP.
This brought a couple questions to mind.  First, will HARP really not look at a loan that began as a No Doc loan?  Second, Is there anyway to get another company to buy an underwater loan to refinance under HARP? 
It sounds to me like I'm stuck, but would love some advice.

Thanks!!

  • March 27 2012 - Enterprise
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Answers (5)

Profile picture for vickiakaglia
I came across your blog, and saw that many of the home owners don’t understand why a lender would not cooperate with refinancing, when the outcome is default by the borrower. I have the answer. It is in their best interest, as default is the most profitable due to the creation of derivitives in the mid 1990s, and the repeal of the Glass-Steagall Act of 1933 in 1998. A derivative (also known as Credit Default Swaps, this is what Hedge Funds manage) is an insurance policy on an asset portfolio, like mortgages, that insures the asset for the full value of the asset at the time the loan was originated. The financial industry has made year over year record profits because they invested in the derivatives, and then either sold the Mortgage Backed Securities on Wall Street or Leveraged (borrowed) against them at the Federal Reserve. When created, the Federal Reserve investigated derivatives and found them to be a huge potential threat to our economy, but the financial industry successfully lobbied the Fed and Congress to keep them unregulated. The next move for the financial industry was to successfully lobby the Congress & Executive Branch in 1998 to get the repeal of the Glass-Steagall Act of 1933. The critical protection for homeowners in Glass-Steagall was that Commercial banks were prohibited from putting their assets on Wall Street with Investment banks. Commercial banks played the crucial role in the current Great Recession, as buyers and sellers of mortgage-backed securities, credit-default swaps and other explosive financial derivatives. The Glass-Steagall Act of 1933 was created to protect American citizens from the Wall Street activity that created the 1929 crash and subsequent Great Depression. Without the repeal of Glass-Steagall, the banks would have been barred from most of these activities. Despite the minor reforms of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as of 2014 nothing has been done on derivatives or restoring protections.
  • October 02 2014
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HARP does not discriminate by the type of loan program you originally used to acquire financing. New HARP loans are originated based on today's eligibility of the borrower and if the loan is owned by Fannie Mae or Freddie Mac.

If you have any other questions or would like further assistance/advice on this, I would be more than happy to help you out! Feel free to contact me anytime.

-Patrick Winchell
Senior Loan Officer
New American Mortgage, Reno, NV.
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  • June 05 2012
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Bradley -

Think of it from Freddie Mac perspective.  The house is underwater, they are at risk of major loss in the event of default.   A 20 year loan will help rebuild the equity position at a much faster pace, thus reducing the risk to Freddie Mac.

The point of HARP is to help Fannie Mae and Freddie Mac reduce the risk exposure and reduce future losses. Help to the homeowner is only a side effect of the objective.

It should also be mentioned that a few weeks after the roll out of Open Access unlimited LTV, Freddie did loosen the criteria and began to accept more 30 year loans.    Shorter term loans still increase the chance for approval (assuming the application shows sufficient income to make those payments), however the approve/decline ratio is not as drastic as when my prior post was entered on March 27.
  • May 01 2012
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Profile picture for BradleyDeBlanc
Thanks Justin. But your last statement makes absolutely no sense at all. Why on earth would LP accept a 20 year term loan but not a 30? I am not disputing that it does this, but that would increase the monthly mortgage payment, thus increase the risk of default. Isn't the whole point of the HARP program to keep people in their houses?
  • May 01 2012
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There are several differences between the same servicer version of the refinance and the new servicer version.

Your best course of action will be to find a lender which offers the Open Access Program and have them submit your loan application to Freddie Mac Loan Prospector software (LP).    The software will determine if your loan is eligible for the Open Access version.

Last year, LP reinstated eligibility to many types of loans which had previoulsy been determined as ineligible.   Your type of loan might very will be in that group.    If LP determines you as eligible, and provides you an Accept finding, you will have options available to refinance your underwater property.

One last note, LP often will Accept only shorter term loans, so if your 30 year request comes back as Caution, you might have better success with a 25 or 20 year request.
  • March 27 2012
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