Why May 31, 2009 is the cut-off date for Home Affordable Refi Program (HARP 2)s

Share

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.

Comments

  1. I just received this email which fit here:

    Quick question on Harp 2 cut off date. I secured loan in April 2003 but fanny Mae purchased June 23rd 2009. So is it the closing date or date they purchased loan? Wells Fargo services loan and are no help. Any advice?

    My reply: This is based on the date Fannie Mae purchased (securitized) your loan. You might want to call Fannie Mae to confirm when they securitized your mortgage (appears you may have already done that?)

  2. Isn’t it a little bit misleading to say that some borrowers are being punished? Most people signed up for a 30 year mortgage, whether they were privy to the market conditions/changes or not they still signed a 30 year agreement. No one is being penalized, more accurately some people are being given a special deal from Fannie Mae when no other investor will help them. I’m sick of the backwards thinking in this country.

    You also contradict yourself. Fannie Mae is simply saying they aren’t going to help people who they think should have known better than to purchase something that is losing equity each month, and then ask why Fannie Mae would continue lending to anyone? You do realize that without Fannie Mae and Freddie Mac almost no one would get a loan because investors wouldn’t be able to sell loans to raise more capitol to give more loans. There is nothing wrong with lending money during a financial crisis, infact I would say it’s imperitive. They should model their programs off the current markets and current risks, which investors have already started to implement, for example good luck getting 100% financing these days, where as 5-10 years ago that would be not a problem even for someone with less than perfect credit.

    In summary it’s very easy to criticize investors for their lending practices. But if you were giving out YOUR money, would you give it to someone who had a pattern of not paying back their bills (low credit), who doesn’t have stable income, on and off of work the past year, or to a home that you know you would LOSE money on if you had to foreclose. Investors don’t want to buy and sell homes, they want to lend money and get paid back. Some investors gave out horrible horrible loans, but fannie mae was not one of them, to say they are penalizing ANYONE is just so far from the truth it’s almost laughable. But I hope that people reading your blog don’t feel the same sense of entitlement that you seem to feel for them.

    • Mr. Levy, I take strong offense to your above comments. You are insenuating that my wife, I and others are trying to not repay are debt is absurd. We bought a new home in Nov. 2007 and are currently employed in very stable jobs, teacher and police offficer. Unfortunately, the economy has crashed and things such as gas, groceries utilities etc have risen while income has not. Also, home values have nosed dived and the house my wife and I bought at 490,000 is now only worth 350,000. Also the loans intrest rate was 7.5% and 10.25%. We are current on our payments and have been since the beginning. Sometime in 2009 our mortgage company contacted us about restructuring our mortgage. We did and closed just before the deadline, but Fannie Mae did not scrutinze it until after the cutoff date. So you are telling me because of that I am not available to take advantage of this program? Again, absurd comments on your part!

    • WOW ! That’s a very one-sided comment. I disagree with you 100%.
      What about those people who purchased a second property at a higher than average rate due to the fact that they loved the property, or were looking for some extra cash flow from that purchase; or what about someone who “refinanced” their primary residence at the same time, due to interest rates falling so low at that time. I believe you are being very insensitive to those who (like myself), have indeed made EVERY payment on my primary residence for 25 yrs. (as well as every payment made on time on the second home, have a credit score of 728. Because, like me, they made these transactions prior to June 2009 or very close to that (in my case 2 months off), they are being told that THEY CANNOT USE THE HARP PROGRAM.
      Aside from my situation, I know several people, who like me have never made a late payment, have steady jobs and excellent credit scores, please tell me “why” you believe these people should NOT be allowed to use the HARP PROGRAM, just because it is a Fannie Mae loan. They didn’t choose Fannie Mae, and neither did I.
      I know a lot of people in these similar situations, some did purchase/refinance their homes prior to the deadline Fannie Mae has put on their loans .
      No one knows for sure “where” the interest rates are going to go – up or down, EVER. We purchased and refinanced at 4.8%, which at the time, was a great interest rate.
      I do not know one person that could (unless they were independently wealthy), refinance without an appraisal and come up with the conventional 80:20 ratio.
      I believe your comments were very insulting to the average PERSON in a situation where they cannot use the HARP program due to this deadline, and we all know (esp. in CA), where we are being taxed to the death,, that improving the monthly cash flow is critical to survival.
      Your comments make it sound as though, anyone that purchased/refinanced prior to the June, 2009 deadline is ‘OUT OF WORK”, MADE SEVERAL LATE PAYMENTS, AND ARE GENERALLY IGNORANT, and that simply is NOT THE CASE, in most situations.
      Sincerely,
      VERY INSULTED BY YOUR COMMENTS

  3. David, if it were my money, I would not have a cut off date based on when the loan was securitized. And I am NOT for entitlements. What I am “for” is to help housing recover by allowing more people to refinance who qualify for a mortgage and who have been making their payments on time – but are not being allowed to refi due to the current value of the home.

    I am disappointed that Fannie Mae is essentially punishing people by saying they should have known better – this is what was said on the conference call I was on. What if someone bought their home 20 years ago and refinanced in May 2009 with Fannie securitizing the loan on June 1, 2009 – they shouldn’t be allowed to refi with HARP 2?

    I don’t know if you’ve been reading my blog long – I don’t recognize you from previous comments. My stance, for the last couple years, has been to eliminate appraised values for conventional mortgages for refinances as long as they’re rate term and the borrower credit/income qualifies. This is essentially what Fannie/Freddie are doing except only for loans that were securitized prior to June 1, 2009 – I’d like to see the securitization date removed too.

    Removing an appraisal is not an entitlement.

    Reducing principal balance, however, would be an entitlement – especially if it’s done without some form of repayment – like a second mortgage in the amount of the “forgiven” balance so that the lender can be repaid in the event the home owner sells the house or tries to refinance for equity out following the reduced balance.

    Thanks for your comment.

    • This is similar to our situation. We bought in September 2004 putting 20% down using a 7 year ARM. We refinanced in January 2010 to get a lower rate. The value had already come down by about 12% at that point but has since nosedived another 17%, so the value is now about 28% down from the purchase price and about 11% below what we owe. Never missed a payment. We would refi in a heartbeat if possible. But to do it with a bank we would have to come up with a giant sum of cash. Harp WOULD be perfect. As for David Leavy, you may be unaware that the Fed and the Government had a rather large role in creating the bubble into which many people bought, usually because it was that time (raising a family). So it is mete that they help solve the problem, especially for those who have done everything by the book and sacrificed a larger place even when prodded because they could afford it with something like an interest only loan. We now need to move. If we cannot refinance we may just mail in the keys because to do otherwise makes no economic sense.

  4. Chris Steila says:

    Let me state my position Mr. Levy! I bought a home prior to 2009 (well before the housing crash). I refinanced that same home in Oct 2009. Fannie Mae secured the refi loan in Nov, 2009. In 2010, my wife left me resulting in a decrease in family monthly income of 50%. in 2011, I was forced into a new position that dropped family income another 10%. A total of 60% drop in household income. That is hardship! People would say “Why not sell the house?” And I am sure you and Fannie Mae can figure out why that wont work!

    I have continued to adjust my income to my debt and now just break even.

    Cant sell, Cant refinance, Cant afford!

    Now David Levy…do you still believe Fannie Mae’s statement that this it is the borrowers fault???? I am not trying to sell the home and make profit. On the contrary…I am trying to keep my home and help the market from any more forclosures.

    The only reason I dont qualify, is because I refinanced the SAME HOME I WAS ALREADY IN! Let me re-state that…THE SAME HOME I WAS ALREADY IN. that really gets my blood boiling!

    So dont go prancing around trying to defend the lenders. Look at what happened to the banks when they screwed up. They got a free hand-out called TARP!!! Saved almost every large bank. Unfortunately, I just dont see that coming my way, so I will go to the bitter end fighting to keep my head above water.

    I will not sit and defend myself for my situation and I take full responsability for it, But the reason this program is such a failure and has only helped 900,000 is because of stupid rules such as that cut off date and the idiots who thought of that rule. I guarantee, anybody involved in drawing up that rule DOES qualify for HARP!!!!!

    Good Day Mr. Levy (and whatever lender you work for),

    Chris Steila

  5. The Fannie Mae rep is full of it! Davy Levy is not well informed. I purchased my home in September, 2004. I am now under water with my mortgage because of the economy and lowered value of the home. I am eligible to a HARP 2 REFINANCE in all areas (income, credit, etc.) except for one critical item WELLS FARGO SOLD MY LOAN TO FANNIE MAE ON JUNE 24, 2009, unbeknownst to me. Wells Fargo tells me that this counts as a “sale” and thus disqualifies me for HARP 2. HOW IS THAT FAIR!!!???? I don’t believe this result is the intent of the program. Will HARP 3 help me???

    • Susan,
      It’s not fair, IMO. Did you refi after your purchased your home?
      We still don’t know when or if HARP 3 is going to happen. If Congress does approve HARP 3, or at least extends (or removes) the securitization date requirement, I’ll be writing about it here!

    • Please let me know how you make out. We are in the same situation. We refined in 2006 … On our credit report it says Fannie Mae 2006 … But, after lots of rejections, we finally found out the reason. Fannie Mae date says July 2009. Anything we can do? Why did they hold it for so long? Or, does the credit report show the correct date and Fannie Mae is wrong. I can’t get any answers :(. But could be saving $800.00 a month.

      • Where are you getting the Fannie may date from? Fannie has recently updated their HARP site to where it will show the actual securitization date. If it shows that it was after June 1, 2009, it could be because the original mortgage servicer/lender did not sell it to Fannie Mae until that time.

        • Diane Leblanc says:

          I will check the Fannie Mae site again for the date … It has been several months. Wouldn’t that be wonderful !!! I ll get back to you.
          Diane

      • Diane Leblanc says:

        :(. It was acquired on 7-1-2009. This is just not fair. The bank held it for years. We need revisions or HARP3 ! Is there anything else Ican do? We are seniors, I’m on disability … And every month I see that 800.00 going to bank when it should be going into my bank account!!

  6. Do you think that Congress will remove the purchase date requirement. And will happen in January 2013.
    I called my bank to refi and was told I do not qualify for HARP and to get a refi loan my house would have to appraise at a lot more than it is currently worth.
    I can barely keep above water, having to occassionly use credit cards. If I default on my house and credit cards how is that helping the economy.
    Heres hoping Congress will act responsiblaly and compassionately for the greater good.

    • Mary Anne, I do hope that Congress removes the purchase date requirement for HARP. You might want to try other lenders – just because your bank won’t do a HARP 2.0 refi, doesn’t mean other lenders won’t if loan-to-value is the only issue. TRY ANOTHER LOCAL NON-BANK LENDER!

      However, debt-to-income and late payments on your credit cards may prevent you from getting a refinance.

  7. I my gosh! That date is so annoying! I am $40,000 underwater and refinanced in January of 2010…no- I didn’t know better…I was taking advantage of low rates! I have been trying to get help thru my lender Chase (GRRRR) and they have been the most horrible people to deal with. Leading me on that they can help me and then telling me they closed my application. they don’t return calls, they have been dragging me along for 1.5 years. they had me fedex them the same documents to them at least 5 times- often saying they didn’t receive them. They don’t care about my issues- if I walked away from my home- they would not loose money- they are insured! Why would they even want to help me? So- on I go paying rent on the home I rebuilt with my own hands (115 yrs old) and have lived in for 16+ years. It was worth 425,000 after we completed the renovation- done all ourselves after work and on weekends and now it’s worth 225,000. We are stuck in our dream house that is now a nightmare. Pam

    • Hi Pam, I hope you can make the most of your situation and try to enjoy living in your “dream house”. I also hope that Congress does pass the regulations to make HARP 3.0 or #MyRefi a reality. It’s possible that if this program does get approved, the securitization requirement may be modified…we need to wait and see. When and IF HARP 3.0 or #MyRefi or the securization date is changed, I’ll write about it here.

  8. Bernard Mitchell says:

    I would appreciate it if you would advise when Congress changes or eliminates the cutoff date.
    Thank you.

  9. hicham hassani says:

    refinanced my home in april 28th 2009….fannie mae bought my loan june 1 2009…the cut off time was may 31st 2009….missed it by 1 day….but my question is may 31st 2009 is a sunday….can they buy loans on sundays??

    • IMO it doesn’t matter if they can securitize a loan on Sunday or not – current guidelines for HARP 2.0 require that Fannie or Freddie securitized the loan prior to June 1, 2009. If HARP 3.0 becomes available and/or this date is changed, I’ll be sure to write about it here.

  10. Bernard Clukey says:

    Many of these comments seem very similiar to my situation, which makes me wonder if the determination of the Securitization date waa a calculated move on Fannie Mae’s part to avoid as many participants in the HARP program as possible. I refinanced my home and closed on April 8, 2009, but oddly enough, Fannie Mae didn’t securitize my loan until June 1, 2009, much like many of the other posts above. Does it really take almost 2 months for this to happen? Makes you wonder……

    • Bernard, I don’t think Fannie/Freddie decided on the securitization cut-off date to avoid helping people. And yes, it may take almost two months for that process to take place.

      I do hope the date is removed so that more people, like you, can have access to the HARP program. If “HARP 3.0″ or any changes to the date cut-off become a reality, I’ll be writing about it here on my blog.

  11. Yep, just went through the Fannie Mae checklist system to see if I qualify and I would but my loan was taken out ON June 1st, 2009! So apparently people who bought their house the day before me were not aware of the housing situation but I was well aware of it a day later? Really?

  12. I am relieved to know that I am not the only one upset over this “date”. My loan is FHA not conventional and so I am able to do an FHA Streamline Refi which is similar to the conventional’s HARP except my loan wasn’t endorsed by FHA until 6/11/09, 3 weeks after my closing date of 5/20/09. I’ve been told that FHA was mirroring the guidelines of Freddie and Fannie and so I stumbled upon this site while trying to search for a “reason” the deadline is May 31, 2009. I am appalled that the answer you received put the blame on us homeowners. Of course I knew the prices had dropped a bit which is why my husband and I decided to upgrade to a bigger house at that time, but at no point did I know that my house would now be worth 30k less 3 years later. Rhonda, is there anything a regular citizen can do to try and push Congress into helping more of us?

  13. I am in the same situation as above. I fought to refinance in early May 2009. My loan was sold to Fannie on 01July2009. I would love to have just held out for the HARP, but had no idea at the time. I am glad to know I am not the only one out there hoping the date guideline changes.

  14. Marlene Jacques says:

    Please let me know when Congress removes the securitization date. I am in the same situation with everyone else. My mortgage is underwater. I cannot refinance. I meet all other criteria for HARP except FannieMae bought mine in 2010.

    The rationale given by FannieMae for the cut of date would have made sense had these lenders been required to disclose these facts to consumers. For example, I was not made aware of the many different layers involved in the process, such as servicers, lenders. brokers I had no idea that the loan was acquired by FannieMae and when Even if I did I had no control over business transaction except to pay the money.

  15. Frank Rentef says:

    We also missed the date by 9 (nine) days… AARRGGHHH. We closed in May, but our loan was not purchased until July (almost a month later). Just once I wish the (now former middle class) would catch a break!

  16. My brother and I both are in the same boat. We closed our loans prior to the cut-off date, but it was securitized after June 1, 2009.
    Hopefully, the rules will change while the interest rates are still low enough.
    Thank you for your very informative blog.
    Diane

    • Diane, it’s really not fair IMO that the cut-off date is based on something that is completely out of the consumers control. Hopefully HARP 3.0 (aka #myrefi) is approved by Congress and it expands or removes the securitization date.

  17. I’m pulling my hair out. I bought my house in 2002 refinanced in 2003. CHASE is telling me my loan was not secured by Fannie Mae until 2011!! and i cant get the HARP loan. What is the suggested action. This is not a matter of days it was 10 years. The dates were confirmed through an independent site. The broker from Chase even said there were problems when they bought out Washington Mutual. Should I pursue Chase, Fannie Mae?? Help?

    • Hi John,
      When you say “independent site” – was it Fannie Mae’s loan lookup site: https://www.knowyouroptions.com/loanlookup This would be the only site I would use to verify WHEN your mortgage was securitized.

      You can call Fannie Mae to see if they have more information for you. I’m really hoping that whoever you spoke to at Chase is wrong. However, it is possible that it took that long to securitize (sell) your loan to Fannie… it would be unusual though.

      Good luck!

  18. I just called the bank about the latest refi’ mailing under the HARP program. Lots of good talk, can get me a low rate of 3.625%, would lower my monthly mortgage approximately $250 per month, and save over $80,000 over the life of the loan (not including the additional savings from lower interest payments), no appraisal required, no fee’s because my loan is with Fannie Mae… it’s all perfect… except we then get to the “oh…” moment. “To qualify, your loan had to have been picked up by Fannie Mae before June 2009, and your loan was picked up on June 1st, 2009. Sorry.” I refinanced my home a few months earlier, but Fannie Mae secured my loan from the bank on 01-Jun-2009. That’s BS.

    • It’s complete BS. I hope the date is changed soon. Try contacting your elected officials in Congress. There’s a new petition you can sign too: https://petitions.whitehouse.gov/petition/make-formal-request-fhfa-eliminate-securitization-cut-date-harp-eligibility-and-allow-re-harping/BlPYbvZw?utm_source=wh.gov&utm_medium=shorturl&utm_campaign=shorturl

    • Marlene Jacques says:

      I have been having the same experiences with multiple mortgage lenders. Initially, they are given you the re-assurance like it’s almost a done deal only to get to the “oh moments.” But, it also seems like my current lender is enjoying my regular monthly payments at the high interest rate. So, I am not only tired and depressed of these disappointments, I feel betrayed by my own credit union/morgage broker. I also feel that I am being punished for being such a responsible homeowner. My loan was securitized by Fanniemae on May 10, 2010, which I had no control over.

      • Marlene, unless HARP 3 becomes available – lenders cannot do anything with expanded loan to values/underwater homes.

        It’s frustrating to me too. We have no control over when Fannie Mae or Freddie Mac securitized a loan.

        Sign the petition linked above!

        • Marlene Jacques says:

          I signed the petition and sent letters to Congress. Can I sign more than once? I am so eager to see the date change that I would sign the petition 10,000. times if it allowwed. This is really frustrating because none of us is asking for a hand out. We are simply asking for equitable treatment. I am paying $ 3,000/month mortgage and only a small fraction or less than $ 500/month goes into paying the principal. That is substantial!

          • I’m not sure about how many times you can sign.

            And it is frustrating – we’re in the same boat of not qualifying for HARP due to the cut-off date. We do have a low rate – but not as low as it could be!!

  19. Thank you for continuing to fight for this. The arbitrary date of 5/31/2009 for HARP is a joke.

    I had a one-time close construction loan from 12/2008 and closed in 8/2009. I’m current on my payments but lenders have no incentive to take a chance as they’re concerned with an appraisal coming in.

    I was amazed that HARP 2.0 still included the date from over 3 years earlier; as if any reasonable person would’ve passed on 3.25% 30-yr rates for multiple years and not already have refinanced with the HARP program.

    I emailed this opinion in 10/2011 to the FHFA Director Mr. DeMarco as well as the White House. I’m going to do the same again, and include my Senators and Congressmen.

    Do you know of anyone nationally that is carrying the torch in lobbying for this to be corrected? Thank you.

  20. Lynette Collins says:

    I like some of the other comments thought I was a shoe in for HARP but didn’t qualify because FANNIE MAE didn’t securitize the loan until 6/1/09…. I closed with Citimortgage April 2009. Has there been any recent updates regarding changing or lifting the May 31, 2009 requirement.

    Thanks you.

  21. Hi,

    I originally purchased my dream home in 2004, refinanced in 2010 and cannot take advantage of HARP program. I am in same boat.

    Thank you!!

Speak Your Mind

*