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 HARP Loan QuestionsQuestions About Mortgage Relief Through HARP

HARP has already helped millions of homeowners who were underwater on their mortgages, and now the program has been revised and expanded to make it easier for even more homeowners to refinance. Using the program to refinance your home could help you get a lower rate, a shorter term, and even a lower monthly payment. And the best part is that even those with no equity or negative equity can apply - it's actually designed with these homeowners in mind.

When HARP debuted, it was only moderately successful. However, now that HARP 2.0 is available the eligibility requirements have been streamlined and more people than ever before can qualify for help through the Home Affordable Refinance Program.

While the process has been simplified, there's no doubt that there are still plenty of questions concerning HARP. From knowing more about what it is, how it can help you, and how to apply, finding out everything there is to know about HARP is important. There are plenty of questions that homeowners have, and instead of waiting to speak to a lending professional about your questions you can take a look at the list below. These common questions may include the ones you have, and could help you understand everything there is to know about HARP relief.


What Is New With The Obama HARP Relief Program?


  • What does it mean to Refinance my mortgage?

    The terms "Upside Down" or "Underwater" simply mean that you owe more on your home loan than your property may appraise or sell for.

    The percentage that you are upside down is factored into what's called a Loan-to-Value (LTV) ratio. So, if you owe $125,000 on a property that is valued at $100,000, then your LTV would be 125%.

    With the new updates to the HARP 2.0 program, borrowers with an LTV ratio greater than 125% may now qualify for a new refinance, provided they meet the other criteria.

    Most of the areas of the country hardest hit by the foreclosure crisis saw upwards of 50% - 75% declines in property values leaving homeowners seriously underwater. This HARP 2.0 update that removes the max 125% LTV cap on refinances is anticipated to help 4-7 million people save an average of $3,500 a year.

  • What is the difference between a refinance and a loan modification?

    The world of lending is filled with different terms and different types of loans. Two terms that are similar in terms of what they could accomplish are modification and refinance. These two procedures may be able to help borrowers with a mortgage crisis, but they do so through very different steps.

    Essentially, a modification is a process that may change some aspects of a current loan in order to make it easier for the borrower to stay current on their payments.

    A refinance, on the other hand, is an entirely new loan. It pays off the existing mortgage and takes its place, usually providing much better terms and rates.

    The government has two programs in place to help borrowers - HAMP and HARP. HAMP is short for the Home Affordable Modification Program, and is sometimes confused with HARP. While HARP offers a way to refinance a home, HAMP offers a better way to modify an existing loan.

    Eligibility requirements for HAMP include:

    1. The property must not be condemned.
    2. Your mortgage must have been obtained on or prior to January 1, 2009.
    3. You must show a financial hardship, and must be delinquent or in danger of becoming delinquent on your payments.
    4. You must show documented income that will support a modified payment
    5. You must owe less than $729,750 on a primary residence or single unit rental
    6. You must owe less than $1,403,400 on a 4 unit rental property, less than $1,129,250 on a 3 unit rental property, or less than $934,200 on a 2 unit rental property
    7. You must not have been convicted of a felony in the last ten years.

    Like HARP, there have been numerous changes to HAMP by the Obama Administration to make it easier for homeowners to qualify for a modification. These changes could help:

    1. Those who defaulted in their trail payments during a HAMP trial period plan
    2. Those who didn't qualify for HAMP due to a debt to income ratio that was lower than 32%
    3. Those who need a modifications on a rental property
    4. Those who defaulted in payments on a previous HAMP modification and lost good standing as a result.

    For many homeowners, HARP could be a way to refinance and get out of a bad mortgage situation. But for many more, including those who don't meet the HARP requirements, HAMP could be the answer. Understanding more about each of them and what they offer can help you determine the path you need to take to get out of a mortgage that is dragging you down.

  • What changes were made to HARP that may make me eligible now?

    HARP was initiated in 2009 as way to help millions of underwater homeowners get out of bad mortgage situations, but it didn't quite have the impact most hoped. Some roadblocks still made it difficult for those who need help the most to actually qualify for a refinance through HARP. As a result, HARP was retooled by the administration to make it easier for homeowners to get help.

    HARP 2.0's biggest change was the elimination of the Loan to Value limit. LTV refers to the percentage by which a homeowner's mortgage is underwater and was initially capped at 125%. This meant those with a loan for $125,000 but property valued at only $100,000 couldn't qualify for the help HARP offered - and these were the very people who needed the help more than anyone.

    Now that this cap has been eliminated and there are no more restrictions on maximum LTV percentage, millions of homeowners will qualify who couldn't before.

    Other changes also removed additional hurdles and made it easier to qualify including things like a streamlined appraisal process. If you meet the basic requirements, you may be eligible for a HARP refinance. Those requirements include the following.

    1. Your LTV ratio must be higher than 80%
    2. You must be current on your mortgage
    3. You can have no late payments over the last 6 months
    4. You can have only one late payment over the last 12 months
    5. Your mortgage can't have been refinanced through HARP previously
    6. Your mortgage must be held by Fannie Mae or Freddie Mac
    7. They must have held your loan on or prior to May 31, 2009

    If you meet these basic requirements, you likely qualify for HARP. Even if you applied before and were turned down, the new guidelines make it much easier to qualify and get the loan you need. You may want to look into applying again now.

  • Is HARP the only refinance program available for underwater homeowners?

    One of the main stipulations concerning HARP is that a mortgage must be owned by either Freddie Mac or Fannie Mae in order to qualify for assistance through the program. It's easy enough to find out if your loan is held by one of these lenders since they each have an easy to use loan lookup tool on their websites.

    However, those who don't have a mortgage held by Fannie Mae or Freddie Mac will still have some options. HARP won't be an option, but groups like the VA, FHA, and USDA all offer different refinance options or mortgage programs.

    Visit www.makinghomeaffordable.gov to get a list of the different options available for those who don't meet the HARP requirements.

  • Who is Fannie Mae?

    There are a few different names you'll hear often in the mortgage lending world, and Fannie Mae is one of them. Fannie Mae is actually a company chartered by the government which was created to provide a stable, reliable source of funding to the housing market. It was chartered in 1938 by the US congress to help stabilize the secondary mortgage market.

    Essentially, the company's primary focus is on purchasing mortgage loans in an effort to make sure that lending companies have the money they need to lend to home buyers. Most people assume that when they visit a lending company, their home loan is given to them from that lender. But in most cases the lender is kind of a middleman, setting up loans and handling the activities of them. Investors are where the money actually comes from, and Fannie Mae is one of the largest lenders in the nation.

    Fannie Mae is regulated by the Federal Housing Finance Agency and currently operates one of the country's biggest foreclosure prevention programs. They regularly work with mortgage lenders and other partners - including the US government - to help homeowners keep their homes and avoid foreclosure.

    There are a few key things that Fannie Mae focuses most of its attention on:

    1. Helping homeowners in a distressed situation. They do so by offering loan modifications, refinance, and foreclosure avoidance services.
    2. Improving overall mortgage liquidity. This is done by keeping funds moving into the mortgage market regularly.
    3. Improving lending standards and helping to encourage sustainable lending practices.

    Fannie Mae focuses on long-term solutions that help homeowners. As a government chartered lender they are able to assist homeowners in numerous areas that other smaller investors and lenders simply can't handle, and they're also one of the two groups that can offer HARP refinancing solutions to their borrowers. It's a name that you've probably hear before, and a name that you may actually be linked to through your own mortgage.

  • What is the difference between a lender and a servicer?

    Your mortgage is handled by a wide range of industry professionals, and knowing the difference between some of them is important - especially when you're starting the process of refinancing or modifying a loan. Two terms that are used regularly are 'lender' and 'servicer', and it's easy to confuse the two.

    A lender is the actual financial institution that gave you a mortgage loan, and nothing more.

    A servicer is the institution that you deal with. They're the ones you mail your monthly payments to, the ones that are responsible for collecting payments, managing your account, and so on. You'll find their name and contact information on your monthly statement.

  • On The Fannie Mae loan lookup tool, what does "Match Found" mean?

    On The Fannie Mae Loan Lookup Tool, What Does Match Found Mean?

    Using the Fannie Mae loan lookup tool is one of the easiest ways to find out whether or not Fannie Mae owns your loan. You'll just have to enter your address to see if this is the case.

    If you get a 'match found' result, it simply means that Fannie Mae does indeed own a loan at that address. It's important to note that a 'match found' result doesn't automatically mean that you qualify for a refinance or modification. Instead, it's just the first step towards applying for a refinance since Fannie Mae must own your loan in order for you to qualify for certain programs like HARP.

  • My loan is owned by Fannie, but it says that I don't qualify for HARP?

    HARP requires that a loan be owned by either Fannie Mae or Freddie Mac in order for the homeowner to qualify for a refinance, and the first step towards getting HARP assistance is to find out if they own your loan.

    But in some cases you may still be turned down by HARP even if Fannie Mae owns your loan. There are a few different reasons for this, but one of the main ones is timing. Fannie Mae must have received your loan on or before May 31, 2009 or else you don't qualify for assistance from a HARP refinance loan.

  • Does Fannie Mae own my first and second mortgage?

    Those who have a second mortgage may be a bit confused by just who owns their second mortgage. In general, running a loan search with the Loan Lookup Tool at the Fannie Mae website will provide you with info on first mortgages. Fannie Mae usually only owns primary mortgages, not second mortgages.

    If you're unsure of who does own your second mortgage, check your mortgage statement and you'll likely find the answer. If not, contact the mortgage servicer you send your payments to and ask them. They'll give you the information that you need and help you figure out just who owns your mortgages.

  • Will the lender require an appraisal with a new HARP loan?

    One of the big hurdles in many refinance situations is the appraisal. HARP guidelines have been modified so that appraisals are no longer required, but that doesn't mean that lenders aren't allowed to require them in a given situation.

    Now that HARP loans are issued to borrowers with a Loan to Value ratio of anything above 80%, appraisals aren't as important. Most of the time, Fannie Mae and Freddie Mac will use an automated valuation program that will give them a clear idea of what your home is likely to be worth.

    However, loans that have an LTV of more than 125% could face the need for an appraisal. Usually this is simply a formality so that the loan can be structured properly, and you shouldn't assume that just because an appraisal is being done that you'll be found ineligible for HARP since this usually isn't the case. Bear in mind that some lenders may put a 150 to 200% LTV cap on their loans, and the appraisal will have some bearing on this.

    Appraisal requirements vary from lender to lender, as do LTV caps and other similar loan issues. Because of this, whether or not you have to have an appraisal will depend on a number of different things.

  • Do I have to refinance through my current lender?

    In March of 2012, the HARP program was modified so that non-servicing lenders could be considered. This means that you don't have to refinance your mortgage through your current lender. Experts suggest that you take the time to look at different banks and brokers in order to get the best possible rates.

    Shopping around for the right loan is a big part of getting the best results from your refinance, and with the new guidelines stating that you're no longer tied to your current lender it's easier than ever to find the perfect refinance loan and get the best rates possible.

  • Am I eligible for a refinance if my current loan has mortgage insurance (MI)?

    Absolutely. While it can be a bit confusing and seem like a major hurdle, the majority of mortgage insurance companies out there are working hand in hand with HARP lenders to make it easy to transition into a new HARP loan even if you have mortgage insurance in place. The main stipulation will be that your new loan has the same level of coverage in place that you had before.

    Lenders will take on the brunt of the work so you have little to worry about in terms of mortgage insurance and your new HARP loan. You may need to sign a couple of extra forms, but the work on your part will be minimal and mortgage insurance won't impact your eligibility.

  • Will I have to pay MI with a HARP since my new LTV will be >80%?

    In many cases, mortgage insurance isn't present because the LTV was below 80% when the loan was originally acquired. When you refinance through HARP and your LTV is still over 80% due to property value decreases, you won't be required to add mortgage insurance to your loan. Only those who already have MI will be required to continue carrying similar insurance.

    In other words, as long as you're not paying mortgage insurance right now you probably won't have to pay it after your HARP refinance is approved. Very rare cases may be different, but in general this won't be an issue.

  • I did not put 20% down when I purchased my property, but I do not have MI?

    This is actually more common than you may think. Remember that in most cases those who had a loan that was at over 80% at the time of closing and who are not currently paying monthly mortgage insurance will probably have a Lender Paid Mortgage Insurance plan in place.

    LPMI won't ruin your chances to refinance through HARP. Lenders only need to make sure that your insurance coverage level is the same in your new HARP loan as it is in your previous loan. With that simple step taken care of you'll be able to refinance and enjoy lower rates.

  • Can I Combine My First And Second Mortgage Into The New HARP Refinance?

    No, you can't. HARP is designed for primary mortgages only and doesn't allow borrowers to combine first and second mortgages or cash-out refinances. However, that doesn't mean that you can't qualify for a HARP loan. Instead, it means that the new lender will need to order a subordination from the second mortgage holder.

    Most lenders have already agreed to work with the HARP program to make this subordination process go as smoothly as possible, but you should be aware that there may be an additional fee charged as a result of the process. It won't eliminate your chances, but you can't combine your mortgages, either.

  • Will the lender need to verify income, assets and employment?

    You'll need to fill out some basic forms that may include details of income, employment, and even assets. However, Fannie Mae won't ask for verification of these details for HARP loans. But that doesn't mean that the lender you go through to secure your refinance loan won't, and usually you'll need to provide at least a verbal verification of your employment and your sources of income. The underwriters may require additional verification in some cases.

    Generally, HARP loans are issued based largely upon the borrower's history of payment. This is why HARP loans require no late payments in the last 6 months and only one late payment within the 7 to 12 month period of time prior to applying.

    However, one issue that could arise is when your principal or interest payments will be increasing by more than 20%. In these cases you'll have to be re-qualified for the new HARP loan. This means that you'll have to go through the verification process again, including income and employment verification.

    Your initial application will be run through a standard approval engine in order to determine your eligibility as well as any additional verification steps you may have to take in order to receive the HARP loan you're applying for.

  • Can I qualify for a new loan on an investment property or second home?

    One of the great things about the new HARP 2.0 is that it allows for all occupancy types to qualify for the refinance loan. This means that second homes, rental properties, and investment properties are all allowed with HARP. Even in cases where occupancy type has changed since the initial loan, you'll still be able to get a refinance on additional properties.

    This aspect of HARP has helped millions of people as well as the housing market and the economy in general by making sure investors and landlords aren't forced to default on their additional properties, something that was a major problem in the early months of the housing and mortgage crisis.

  • Are All Borrowers on the existing mortgage required to be on the new loan?

    Are All Borrowers On The Existing Mortgage Required To Be On The New Loan?

    With a HARP refinance, it is possible for borrowers on the existing loan to be removed from the new one. There are a couple of stipulations that will be required, however.

    1. The borrower being removed must also be removed from the property deed.
    2. The remaining borrower must be able to provide documented evidence that they have been making payments from their own funds for the last 12 months.

    The only time when proof that payments are coming from the funds of the remaining borrower will be if the other borrower is being removed from the loan due to their death.

  • Can my lender force me into an escrow account if we don't have one?

    Yes, you can be forced into an escrow account and in most cases you will be. But this isn't something that is the act of the lender. Instead, moving into an escrow account is actually a requirement that the government put in place as part of the program. Taking out a new HARP refinance loan will usually require you to move into the escrow.

    Still, the benefits of the HARP program make this a minor issue for most, and the rewards it offers to homeowners makes it well worth doing. Escrow or not, it could help you get above water again on your mortgage.