Why May 31, 2009 is the cut-off date for Home Affordable Refi Program (HARP 2)s
I'm on a confererence call with Fannie Mae regarding the updates made to HARP 2. Someone has asked about how the date was selected for the cut-off of when when a mortgage is eligible for HARP 2. The answer from a gentleman representing Fannie Mae said (paraphrased – this is a conference call):
Because anyone who bought a home or obtained a mortgage June 1, 2009 or later, knew the they type of housing marketing were getting into.
The Fannie Mae rep insinuates that those who financed prior to June 1, 2009 may have not been aware of the dramatically changing climate in the housing industry.
By the way, the date of May 31, 2009 is not the closing date – it is the date Fannie Mae securitized the loan which may be weeks after the closing date. I have had clients who have missed qualifying for a HARP refi because Fannie Mae securitzed their loan ON June 1, 2009, disqualifying them by one day!
I was surprised by the Fannie Mae rep's response. I assumed there was a more scientific reason for the date of loans securitized prior to June 1, 2009 instead of "these borrowers knew better".
In my opinion, the date should be removed. Why punish borrowers who happened to refinance or buy after that time period. If Fannie Mae's argument is that these borrowers knew better, how could they continue to have mortgage programs available during that time? I feel that if borrowers are qualifed and can benefit from a HARP refi, they should be allowed to have access to this program to help their personal finances and therefore, the economy to improve.
Other factors Fannie Mae is stressing is that loans are still underwritten based on risk – especially borrowers in a negative equity position. It's not guaranteed that HARP refi's will receive an appraisal waiver and not all scenarios will receive an approval for a HARP refinance. I've been contacted by Washington area home owners who lack steady income or have blemished credit assuming they will qualify – they may not. We won't know until we submit your loan scenario to Fannie Mae's automated underwriting system DU Plus and have a response before we can determine IF someone qualifies for HARP and what documentation will be required.
If you are interested in a Home Affordable Refi (HARP 2) for your home located anywhere in Washington, please click here.