Posted by Bear900/CA on 1/25/12 5:37pm
Msg #409874
HARP 2.0 - FACTS & FICTION GUIDES FOR NOTARIES
What is HARP? Home Affordable Refinance Program. This is a relief refinance mortgage provided by Fannie and Freddie (not FHA) for conforming and jumbo conforming loans. The following site gives some guidelines but watch for updates.
https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf
FACT - Banks & Brokers around the country are gearing up for this and so should Notaries!
I am a broker in CA, am involved with lenders and loan originators across the country, and we are currently inundated with meetings on how to get this program out to the community. Some meetings are being sold-out. There has been some residual cynicism from the abysmal failure of the original HARP program. We have waited for the other shoe to drop on this one and so far it hasn’t. That’s a strong positive for everyone in the food chain!
I have listed ten items to answer some key questions as this topic is much more involved. All items posted are subject to change and should be verified with your mortgage consultant or financial planner. There are still updates being posted.
1. Since HARP 2.0 loans are backed by Fannie and Freddie they are guaranteed to the public. – FICTION. While Fannie and Freddie guarantee and eventually buy the loans, it is the investors of banks and lenders who provide final guidelines or as we call them, ”overlays” to determine who qualifies for their loans. These vary from investor to investor. Therefore there is no rigid application of the GSE guidelines except for the minimal. As of now, no lenders are offering all the benefits spelled out in the Fannie and Freddie guidelines. The program will need to wait until the end of March for Fannie, and March 17 for Freddie to have guidelines in place for their automatic underwriting systems. Again, investors will always overlay those guidelines. Many applications are being taken now however, so prepare!
2. Anyone underwater can apply for a HARP 2.0 refinance loan. – FICTION. The current loan must be owned by Fannie or Freddie. The original loan must have closed prior to June 1, 2009. There are other conditions, some stated below. The program will last until 12/31/2013, as of now. If the home is on the market and the loan is current, Fannie is waiving the requirement to remove it from the market.
3. HARP 2.0 loans must remain with the original servicers. – FICTION. Unlike the original program, these loans may be transferred to other servicers and that is one of the big positives to this program!
4. Only the Big Banks can do these loans. – FICTION. Brokers are able to shop loans to a wholesale lender with investors who sometimes have fewer overlays then a large bank and can be swifter in the process. Big Box banks have a reputation for getting bogged down in their processing while a broker or broker/banker can generally move much swifter and can also shop for better rates. There is also an array of products (loan types) that big box banks may not offer. More loan types = more loans = more notary work!
5. Refinances will be as high as 150%. – FICTION. There is NO cap to this program. The LTV (loan to value on the 1st mortgage) ceiling is being waived. New ARMs and 40 year loans will be maxed at 105% on LTV. No new interest-only loans are being offered. (makes sense!)
6. HARP 2.O loans will not require an appraisal. – DEPENDS (but mostly FICTION). Freddie will use an appraisal waiver ($75 fee) up to 80% LTV. Fannie may do similar. That obviously defeats the purpose. See questions 27 & 28 in Fannie Guidelines from the above link where it may prove valuable and necessary to get a new appraisal.
7. DTI (debt to income) and asset verification will not be required. – FICTION. These will vary from lender to lender. Fannie and Freddie are still posting guidelines. If payments go up by 20% (ARM to fixed, or a shorter term loan), DTI must be max 45% with min 620 FICO. New borrowers (spouse) may at times be added or deleted if proven that one can make the payments. Assets and reserves verification is required by Fannie. PMI (private mortgage insurance) requirements still exist but may also be transferred. New and big plus (even if you don’t understand it)!
8. HARP 2.0 loans can be in pre-foreclosure. – FICTION. As of now, payments must be current for the past 6 months, and only one 30-day late in 12 months. Prior BK and foreclosure may be waived. Since the program lasts until 12/31/13, there is a good chance for many to get up to speed and qualify if need to. The current program length predicts a crunch in notary work! Hopefully it will be extended!
9. Second mortgages and HELOCs can be refinanced into the 1st. – FICTION. Sorry, they must subordinate. Supposedly, this won’t be as big a roadblock as with the original HARP program. Big banks have already agreed. In short, only the first loan may be refinanced using HARP guidelines.
10. This loan is just another freebie handed out to those who should have known better. – FICTION. Hardship is not required. Many people found themselves catching a falling knife when they bought in sudden declining markets. These people have stayed put, pay their mortgages on time, and have not walked away. They may be stuck in a 5 to 6.5% loan because they are underwater while everyone else has had a chance to refinance. They are perhaps the most deserving customers.
Do I qualify? http://www.zillow.com/mortgage-calculator/harp-eligibility/
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