Finally, Some Lender-Provided Guidelines for the Home Affordable Refi!

Date:April 3, 2009 | Author:Alison Paoli | Category:Foreclosures

The Home Affordable Refinance Program (HARP), which was announced in March, has left quite a few homeowners confused and/or excited. Today, we learned of more information about the HARP program that we wanted to pass along (hat tip to Seth Raddue of TriStar Finance Inc.)

Unlike Freddie Mac-backed loans, which require homeowners to go through their current servicer (the company they get mortgage statements/coupons from) to complete the Home Affordable Refinance program, Fannie Mae’s regulations allow homeowners to go through either their current servicer, or a mortgage company of their choice, which allows for more mortgage rate competition.

Here are some interesting guidelines regarding Fannie Mae-backed loans that are refinanced through someone other than their current servicer. Please keep in mind that this information is only from one lender and that each lender may tweak individual parts, specifically the FICO score requirement, program start date, and loan-to-value ratios:

HARP Program start date: April 6, 2009, although not all providers are guaranteed to be up and running by then.

Loan-to-Value Ratio: The program is designed for homeowners who owe between 80% and 105% of the value on their home but, at least according to this particular lender, only homeowners with less than 95% loan-to-value will be able to refinance at this time. But, after the first week of May all homeowners with up to 105% loan-to-value will the able to refi.

Credit Scores: A minimum FICO score of 580 will be required for loans with greater than 80% loan-to-value ratio. A minimum FICO score of 680 will be required for all high balance adjustable rate mortgages with greater than 80% LTV. A couple of points:

This is different from Freddie Mac-backed loans where a minimum credit score will not be applicable
This requirement will expire after the first week of May according to this lender in particular

Mortgage Insurance: Mortgage insurance will not be required as long as the original Fannie Mae mortgage did not require primary, borrower-paid mortgage insurance.

Ineligible Homes: Co-ops and manufactured homes are ineligible

Eligible Borrowers: The borrowers on the existing mortgage must be identical to the borrowers on the new mortgage. Borrowers may be added to the new loan as long as the existing borrower is retained.

Not Just The Home You Live In: The occupancy can be primary, secondary or investment homes. (I had understood this program was just for owner-occupied homes, but according to this lender, I’m wrong!)

Not For Sale: The home cannot be listed for sale

Income Documentation: You may need one current pay stub and verbal verification but be prepared if you are asked to provide more than that.

To find out if you have a loan backed by Fannie Mae check out the government’s Making Home Affordable Web site.

And remember, to qualify for the Home Affordable Refinance plan you MUST be current and in good standing on your mortgage. If you are not, the Home Affordable Modification Program (HAMP) could be for you.

We’d like to hear from all sides of the table on the HARP plan. Homeowners, have you had any luck talking to retailers about this? Retailers, have you been able to start getting the ball rolling in your office?

« Previous Post Durham, NC Man Uses Twitter to Attract Buyers Next Post » Lakeside Home of Former Auburn Coach for Sale: $2.375M

Are Great Credit Scores Sexy?

Sep. 1 No Responses

Mortgage Definition: FHA Streamline Refinance

Apr. 15 24 Responses

Former Pro Baseball Player Lenny Dykstra Facing Foreclosure

Responses (38)

0 tweets 0 likes 38 comments

unemployed 6:26 PM - Apr 3,2009

What if you’re unemployed, but still current on your mortgage? Which of the programs would help out in that case?
Kurt 9:28 AM - Apr 4,2009

Which lender released these guidelines? We have been told that only Suntrust is going to be able to accept applications from mortgage brokers on these beginning April 6 and that most other lenders are lagging….Any info you can give is very appreciated as we have hundreds of applications ready to submit….Thank you in advance for your assistance!
Eric 11:28 AM - Apr 4,2009

This is great if you’re lucky enough to have a Fannie/Freddy-backed mortgage. But for those of us in dire straits in more expensive areas like New York, SF or Los Angeles without their backing, we are screwed. This plan – or some plan – should cover loans not backed by them so that they are backed by them.
Iowa Loan Modification 11:40 AM - Apr 4,2009

This is great news!
Jean 2:18 AM - Apr 6,2009

Even if you are a homeowner who meets the criteria of the Making Home Affordable Refinance Plan, the final closing costs seem prohibitive. For my $216k mortgage, refinancing to a rate near 5% would still require an upfront cost of about 10k or more. With more jobs being cut in this economy, we are inclined to hang on to what little cash we have saved and we may miss the opportunity to refinance to a rate that would save us thousands in interest.
Kurt 4:43 AM - Apr 6,2009

Hi Jean,

Borrowers are able to roll the costs into the loan, so as long as the new loan amount and costs are equal to or less than 105% of the current value then no cash out-of-pocket from the borrower is needed. As you stated, people “are inclined to hang on to what little cash they [we] have saved” so this program will allow them to free up cash-flow by lowering their payments at no out-of-pocket expense to them. This will be a tremendous program for millions of people who have these same cash and job concerns.
bill 10:19 AM - Apr 6,2009

These are some great tips I would like to use them on my site with a link back to you if thats ok.. Just drop me a form and i will be happy to put you up.

Fort Lauderdale Water front Homes
Kurt 10:46 AM - Apr 6,2009

Hi Bill,

Yes, feel free to utilize that info. As far a “dropping you a form,” I’m not sure what you mean. My current website targets “Trusted Advisors” who represent clients who may need mortgage services. This is not a website that I would want customers visiting directly. That said (and I’m assuming your clientele and reach is direct-to-consumer), the info I would appreciate you promoting is our toll-free Prequal Hotline (866-520-0797) where anyone who has a mortgage in Florida or Georgia can call and get a quote within minutes as to what we may be able to do for them. We guarantee to fix their closing costs on the good faith estimate to match EXACTLY what their actual closing costs are at closing and we also guarantee to deliver them the best overall mortgage loan both in cost and interest rate. They cannot get a better mortgage anywhere as we will eat the costs in some cases to deliver on our promise. Btw, our company name is Real Estate Partners (“REP”)…If you have any further questions, do not hesitate to contact me anytime at KBierek@gmail.com and I will provide my direct phone number at that time…Thanks Bill!
http://loanmodificationca.net 1:55 PM - Apr 6,2009

I thought there would be more detailed information about the refi program. There seems to be a lot uncertainties. What lende does this post refer to?Mike
Adrian 3:52 PM - Apr 6,2009

will the Fannie loan work like other loans where the borrower will have to pay point to the lender or hike the rate up to pay less upfront? Are the rates current market with no-add ons?
Imee 2:36 AM - Apr 7,2009

I think the Making Home Affordable plan is great, even though it’s not for everyone. Thanks for posting some of the guidelines–this will make things a little less confusing for those who aren’t informed about it.
Tim 10:22 AM - Apr 7,2009

Wow!! great info. Lots have been learned about borrowers and loans.
Keep posting!!
JSLittlehale 10:33 PM - Apr 7,2009

I have a Freddie-owned loan serviced by HSBC, and was told a couple of weeks ago by an HSBC rep that my place had appraised “around” 100% LTV (request for the appraisal has been sent).

When called today to ask about the HA Refi Prgrm, HSBC said that it was still “mapping out” how to manage the Program and said they would, if I wish, refer me to their Loss Mitigation Dept to explore their own loss mitigation programs. I’m current and will stay that way, so no thanks. A few blogs report that 95-105% LTV borrowers will need to wait until the 1st week of May. Any corroboration? Is HSBC particularly slow in getting out of the chute?
Sally 9:48 AM - Apr 10,2009

Please does anyone have information regarding Jennie Mae
are they part of the Home Affordable Refinance. I have
an FHA Jennie Mae loan. I am current on my mortgage but
my interest rate is high 6.5. I would like to get a lower
interest rate. I purchased my home for $292,000 and have
lost close to $60,000 of home value. I purchased my home
about 7 months. ago.

I tried calling my mortgage company countrywide but they said
that I do not qualify as they are working with only Freddie &
Fannie loans.
Kurt 4:01 PM - Apr 10,2009

Hi Sally,

I know that the Home Affordable Refinance program is only for mortgage loans currently held by Freddie Mac and Fannie Mae and that no governement (i.e., FHA, VA, etc) loans qualify at this time. I am not sure if FHA loans are considered for loan modifications, but you should call your mortgage broker or Countrywide directly and ask for their loan modification department. If you do not find any luck via either of those routes, please contact me at KBierek@gmail.com and I will see if I can find an avenue to help.
Kurt 4:29 PM - Apr 10,2009

Hello all,

I’ve been a part of this blog and wanted to update everyone with what I know. As I stated in a previous post, borrowers are able to roll all costs into the new loan (Fannie loans only), so long as the new loan amount and costs are equal to or less than 105% of the current value (if the costs make the loan exceed 105% then the amount above 105% will need to be paid out-of-pocket at closing by the borrower since the max new loan amount is currently capped at 105%). Keep in mind that there is current rumor that they are considering raising the 105% limit in areas with high depreciation such as Florida and California, but that is currently just rumor…If your loan is currently held by Freddie, the program is similar to the Fannie program in many areas (there are some differences), but the borrower is currently limited to adding only $2500 to the new payoff/loan amount which means that borrowers will need to almost certainly pay out-of-pocket at closing to obtain a sensible rate. You can and are encouraged to use your mortgage broker to facilitate your refinance for both Freddie-held and Fannie-held loans…There will most likely be upfront points charged in order to obtain an optimal interest rate and this will be standard no matter who you use to facilitate the refinance (this is due to the lenders and Fannie/Freddie adding charges based on occupancy type (e.g., owner occupied vs investment property), home type (e.g., single family vs condo), loan-to-value ratios, credit scores and a combination of both). Keep in mind that lowering your interest rate and freeing up cash-flow is the #1 priority in 99% of the scenarios. Any upfront fees are truly a non-factor when compared to the near-term and certainly long-term benefits of being able to accomplish the refinance. For example, let’s say your total closing costs (not counting escrows since you will receive a refund of your current escrow account typically in about 60 days following the new refi) are $7,000 and you are able to save 2% on a $200,000 loan (and keep your home!) then you are saving $4,000 per year. You will recapture that $7,000 in less than 2 years and save a whopping $112,000 over the final 28 years of the loan! I believe it’s safe to say that we all would pay $7,000 to essentially earn $112,000 (or even half that amount)…If anyone has any further questions, please do not hesitate to post here in this blog or simply email me at KBierek@gmail.com. Happy Easter!
sally 4:55 PM - Apr 10,2009

Kurt,

Thank you for responding I will try again with countrywide to see if I can get information concerning a loan modification.

Give me any tips if you have any. What do they generally look for to see if one can qualify for a loan modification?
Kurt 5:37 PM - Apr 10,2009

To my knowledge, regarding a loan mod, they will want to see your most recent Federal tax return, bank statements includiing stocks, retirement, etc and a hardship letter explaining what financial or situational difficulty you are or have been having (e.g., lost your job; demoted; medical hardship; unexpected financial burden; etc). They will also ask you what you make per year/month (I don’t think they verify it, but don’t quote me on that), but you don’t need a job to qualify for a loan mod and it’s acutally better if you don’t have one as long as you have reserves….Drop me a note if this doesn’t work as I may be able to help you as their are other ways to help depending on individual circumstances and goals, etc….Have a great night and weekend!
Tracey 7:58 AM - Apr 15,2009

Sally–I am a Countrywide customer as well, was told the same thing as you that Jennie Mae is not part of that program. Call Countrywide and ask about the FHA Streamline. The rate for that is 4.875, and I am locked in. There is no appraisal, no income verification and no credit reports needed. They just refinance your current loan amount with the new interest rate. I am saving roughly 250 a month by doing the Streamline. Give Countrywide a call, and ask some questions about it. Any up front fees can be rolled into the refinance, so there is no out of pocket upfront costs, as long as theose fees don’t make you go over your orginal mortgage amount.
Phil 1:29 PM - Apr 16,2009

I live in Florida and I am seeking a refi for a little different reason. I want to be able to retire “in my home” within 15 years. Presently I have the income to pay my mortgage but due to the economy I find myself upside down in my mortgage by 127%. None of this is due to any consolidation of bills only the reaprasial of my property value due to the economy. I can pay the payments on a 15 year mortgage but I cannot pay both the fees and the difference owed due to new my property apprasial. It would seem if someone can afford the payments a refi could be made available no matter the loan to asset ratios under the present circumstances. Is there something I can do?
Manassas VA Homes 4:36 PM - Apr 17,2009

I wonder if more will walk away from their homes if they are upside down… once home owners realize they are just reaffirming debt on a home value they may not be able to attain again for many years to come.
Kurt 4:52 AM - Apr 19,2009

Hi Phil- In your case it looks like you are one of the many people who are being discriminated against for being in and staying in good financial shape (i.e., job and income-wise, etc)…However, if what you are telling me is true about your job and income situation, then you actually do not need to refinance in order to save a ton of money. I’m assuming that you are currently in a 30 year fixed rate mortgage since you state that you “can pay the payments on a 15 year mortgage…” All you need to do then is calculate what the payments would be on a 15 amortization schedule and allocate the difference in your current monthly payment and the 15 year payment (or a time period in between) toward the principal balance of your mortgage each month. This will save you thousands of dollars without costing you anything (other than a higher monthly payment which you are prepared to pay and able to afford anyway)….Keep in mind that I only recommend this option to people whose plans are to own their home free and clear and who can afford the higher monthly payment (both factors which you clearly state are goals of yours)….If you have any further questions just shoot me an email at KBierek@gmail.com….I hope this helps
Lorine 9:21 AM - Apr 22,2009

Hello. I want to take advantage of the home affordable refi for Freddie Mac mortgages but I may not qualify. My LTV may be above the 105% limit. I currently have a 5-year interest only mortgage that will reset in early 2010. I want to refinance to a 30-year fixed rate. What options do I have if my home LTV is above the 105% limit.

Thank you.
Kurt 9:34 AM - Apr 22,2009

Hi Lorine,

Please call me at my office, toll free, at 866-800-0668 and I will be happy to go over your options (you do have some) and see what is best for you and your situation/goals.

Kurt Bierek
Dan 12:17 PM - Apr 22,2009

Is there any additional information that anyone can provide on HSBC participating in the Making Home Affordable Program? I see JSLittlehale on April 7, 2009 made an indication that they were. Can someone provide an update? Thanks.
Renata 2:56 PM - Apr 24,2009

Hi Kurt,I have been doing a lot of research on “Making Home Affordable Program”and couldn’t find a firm answer to my concern.We have had our condo for 5 years and purchased it as a primary residence.
We lived in it for 4 years.Last year we moved my 80 years old father in law to live there since he doesn’t have a place of his own and no income.
(We moved into my husbands house which he inherited 35 years ago).Now we would like to refi the condo to 30years fixed, as our rate is going to become adjustable in couple years.Can we refi it as a second home under “Making Home Affordable Program”.
Thank you Renata
Arlington VA Homes 6:46 PM - Apr 26,2009

Great info, thanks for sharing.
Bridget 9:57 AM - Apr 30,2009

I have a Freddie mac mortgage with HSBC and I just called reg home aff ref application and was told it wont be until mid may that they roll out the program. In the mean time hold on and make your payments current. I will be put on a list that I am interested. This is really not good. What happens in the mean time keep struggling.
Lorine 10:23 AM - Apr 30,2009

Have you known of any lenders who are charging higher interest rates on the making home affordable program even if the borrower’s LTV is within the 105% required limit set for the program? A lender told me that I will be charged a higher interest rate because I had zero equity on my home even if my home is within the 105% guideline. Can lenders do that? Isn’t that defeating the purpose of the program?
Kurt 11:29 AM - Apr 30,2009

Hi Lorine,

There should be very little, if any, difference between the rates on the Home Affordable Refinance program and a conforming program of the same term (i.e., 30 yr fixed; 15 yr fixed, etc). However, keep in mind that the conforming program does not allow for LTV’s above 95%, so that’s where (in some cases) the need for someone to use the Home Affordable Refinance will be necessary since it’s the only program that will even facilitate the loan. The rates will be higher if the LTV is above 95% compared to a lower LTV, but that is the way it is on every loan, and always has been…Please give me a call or email me and I will be happy to assist you.

Kurt Bierek
877.217.2077
KBierek@gmail.com
Loan Modification Zoom 2:28 PM - May 6,2009

The Home Affordable Program (if the lender chooses to participate) on the Loan Modification side allows for a floor rate of 3% on a 30 or 40 year term depending on borrower’s finances, with the possibility of a balance reduction or partial principal forbearance. In the immortal and oft misquoted words of Paris Hilton, “that’s hot.”
Tate 12:36 PM - May 15,2009

HSBC…They just don’t care. I just spoke with them today and they said they will not be taking part in the Making Homes Affordable program. She said they may consider another modification but they have decided to stop refinancing. It’s frustrating because they bought my loan. I did not choose them. It’s not a fannie or freddie loan and nobody cares. I’m just left out in the cold. I have not missed a payment but I need a permanent fix and there seems to be to be no option out there for people like me who owe a bit more then the home is worth.
Chris Doveas 4:15 PM - Jun 23,2009

This company is 100% legitimate and I am currently working with them on a loan modification. They know the program inside and out. You can do the Home Refinancing option on your own, however I wouldn’t do the modification section without the use of an experienced attorney. You can check them out at http://www.ushomeafford.com. Good luck.
Jackie 4:34 PM - Jan 6,2010

PLEASE READ IF YOU ARE GOING TO TRY FOR A MAKING HOMES AFFORDABLE MODIFICATION LOAN OR HAVE APPLIED OR TURNED DOWN..If you are wanting a Making Homes Affordable Modification Loan and the mortgage/bank is telling you are not qualified there are steps you can do to verify this. First you should contact (www.makinghomesaffordable.gov or 1/888-995-4673) first to get pre-qualified before contacting your bank/mortgage company. It takes just one phone call. They will put you with a counsler the get all your information to establish if you are eligible. Once you are then will forward it to your lender. That is not a stopping point you must call your lender and send them all the information they require (call weekly to make sure they have rec’d it). If for any reason after all information has been sent they tell you that you don’t qualify CALL Making Homes Affordable Program again to inform them your lender may not be following the guidelines. You should then be transfered to the Escalation Team. They will go over your current statis and if you allow them they will conference call with your lender to get your modification started. DO PAY ANY PAYMENTS YOU CAN….DO NOT GO ON THE RECOMMENDATION TO MISS PAYMENTS TO QUALIFY FOR THIS PROGRAM…..THAT IS INCORRECT. Each lender has their own loan modifictions that they may want you to do instead of the MHA one. You do not have to do these you have the right to MHA loan. My lender has made statements that are unbelievable. They stated that I should not pay for 3 months then I will qualify for the MHA Loan. I new something was wrong and decided to report it to MHA when I found out all this information. The Escalation team counsler was told the same thing by the helpful person at my Lenders Loan modifiction department. So it was verified that they were not following the guidelines. Keep records, names, reference numbers of calls, fax records it helps.
Don’t stop here either contact your state Dept. Of Banking and Finance, send your situation in an email to your Senators, Representatives and even the White House. You must fight for your right to have this. The banks are the ones that are stopping this! Why I don’t know since they will only lose money if they continue to get forclosures!
finance advice 8:31 AM - Feb 11,2010

With the housing crisis the government has wanted to make sure that as many homes and mortgages are saved from going bankrupt and lost which is why they invested all the billions into helping the mortgage companies to help the mortgage payers. The payer even though is probably paying for a house that’s less than the mortgage they should not be depressed and continue to carry on paying the mortgage and if struggling then seek financial help and don’t suffer alone.
Charlotte Movers 10:32 AM - Jun 18,2010

I think that home affordable refinance program is a great idea but I feel that if you are required to produce proof of income like a pay stub it may leave some people out of the loop. I also think its strange that you can be eligible on an investment property but the home cannot be put up for sale. I would like to know more information to help clarify.
95mortgages 2:42 PM - Aug 29,2010

Competition for lenders should always be of benefit to the consumer.