NOTE: This program has been extended thru June 30, 2012 DECEMBER 2013.
Fannie Mae and Freddie Mac's Home Affordable Refinance that allows homeowners upside down with their home equity to refinance has been extended until next summer. From Fannie Mae:
This program is for borrowers who have demonstrated an acceptable payment history on their mortgage but, due to decline in home prices or where mortgage insurance is not available, have been unable to refinance to obtain a lower payment or move to a more stable product.
…lenders may continue to apply for the HARP flexibilities to loans originated under Refi Plus and DU Refi Plus provided the note date is on or before June 30, 2011…
This program has been very helpful for Washington homeowners who are interested in reducing their mortgage payment or refinancing out of their adjustable rate mortgage. This is not a loan modification–this is a refinance.
NOTE: the following guidelines are for mortgages that are securized by Fannie Mae. I'll follow up with a post on those owned by Freddie Mac — which I can help you with too.
In order to qualify, the home owner's mortgage that is being refinance must be owned by Fannie Mae. This isn't something that most home owners know since you don't write your mortgage payment to Fannie Mae, but you can check to see if Fannie is the investor on your mortgage by clicking here. To be eligible, the existing mortgage must have been owned or guaranteed by Fannie Mae prior to March 1, 2009.
Fannie Mae has made some recent adjustments to the HARP program including allowing the removal of borrowers as long as the remaining borrower(s) can demonstrate they have been making the mortgage payments from the own funds for the prior 12 months (except for in cases of a borrower passing away). If a borrower is removed from the mortgage via a HARP refinance, Fannie will also require that the borrower is no longer on the title to the home.
Here are some other key points about the Home Affordable Refi (DU Refi Plus):
- Maximum loan to value is 125%. There is no "combined loan to value" limit.
- Existing second mortgages must be subordinated (second mortgage lien holders review and decide IF they are going to allow the mortgage to be subordinated). No new subordinate financing (second mortgages) are allowed.
- Second mortgages or HELOCs are not allowed to be paid off with a HARP refinance. (I WISH they were).
- If your original mortgage was at 80% loan to value, your HARP mortgage will not have private mortgage insurance if your current LTV is over 80%.
- Fannie Mae High Balance/Jumbo mortgages are eligible.Loan limits in the King, Pierce and Snohomish County area are up to $567,500 for a single family dwelling (however the mortgage being paid off must be owned by Fannie Mae–see above).
- Available for primary, second homes and investment properties.
- Appraisals may not be required depending on the response from the automated underwriting findings. With that said, I recommend planning on having an appraisal…I've seen very few come through with an appraisal waiver option.
- DU Refi Plus (HARP) has price hits (aka LLPA) based on your credit score and loan to value.
- Borrowers are only permitted a maximum of $250 cash back on a Fannie Mae HARP refi
Borrowers must still qualify for the mortgage. Documentation may be reduced to one paystub and a verbal verification of employment for salaried employees or one year tax returns for commissioned or self-employed borrowers.
Various lenders or banks may have their own underwriting guidelines or "overlays" with regards to credit scores or debt-to-income ratios.
With a HARP refinance, the home owner does NOT have to go back to the mortgage servicer (the bank the borrower makes their mortgage payment to).
If I can help you with a refinance for your home located in Washington State, please contact me. I'm happy to review your options, including HARP or possibly FHA (which will allow including a second mortgage with a refinance) at no obligation to you.