Toot the horn, sound the bells, this HARP sounds good!
With all this noise, did you catch the significant change? Read below …
By now, we are all familiar with recent news from Washington that the Federal Housing Finance Agency rolled out HARP II in an effort to reach more borrowers. The basic changes include:
· Lower fees
· Removing the 125% LTV ceiling
· Eliminating the need for a new appraisal (in many cases)
· Extending the HARP program through 12/31/13
Good stuff. BUT, the most significant change is:
· Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac.
Huh? Previously, most banks were only offering HARP financing up to 100% LTV because Fannie and Freddie were placing restrictions on the portion of the financing in excess of 100% LTV. The opportunity to finance up to 125% LTV was available, but banks weren’t participating in this program. It wasn’t worth the risk.
Now that Fannie and Freddie have eliminated their indemnifications, lenders feel comfortable offering loans up to 125%, 150%, even 200% of the value of the home.
So which transactions are eligible under the tuned-up HARP?
· Mortgage owned by Fannie or Freddie
· Mortgage sold to Fannie or Freddie before 5/31/2009
· Mortgage has not been refinanced since 5/31/2009
· Original loan amount $417,000 or less
· Current LTV in excess of 80%
· Borrowers must be current on mortgage payments
· No late payments in past 6 months / Up to 1 late payment in last 12 months
If this sounds like your loan, give us a call. We will get you a fixed rate in the 4s.
By November 15th, lenders will have full details.
