Here’s your opportunity to ask President Obama your question related to housing, including mortgages. Are you wondering why we don’t have HARP 3.0 yet? Or perhaps why HUD does not allow an FHA streamline refi to a shorter term if it increases the payment (even if the borrowers qualify for the increased payment)? Maybe you’re wondering why would bank and credit union loan officers only be registered and held to the same standards as a licensed loan officer?
An article published today by Bloomberg Businessweek gives some hope of HARP 3.0 and #MyRefi (aka the Obama Refi) becoming available to underwater home owners.
Many responsible home owners who have not been able to refinance under the current guidelines of HARP 2.0 because either their existing home mortgage was securitized after June 1, 2009 by Fannie Mae or Freddie Mac OR because their existing mortgage is not securitized by either Fannie or Freddie.
The Home Affordable Refi Program was created to help home owners who have lost equity in their homes and would otherwise qualify to refinance (they have employment, income and good credit).
In today’s article, the Treasury may overstep Congress to help make the expanded program that many have been hoping for a reality. From Bloomberg Businessweek:
Treasury may act unilaterally to aid borrowers who owe more than their homes are worth if Congress doesn’t pass legislation providing assistance, Stegman, a counselor on housing policy for the agency, said at an American Securitization Forum conference.
“Legislation would facilitate a refinance, whereas under our existing authority, Treasury could only modify the most deeply underwater loans and pay investors for some amount of forgone interest,” Stegman said.
It’s another short week with the Martin Luther King Holiday observed today.
President Obama is also being sworn in for his second term. Many home owners are hopeful that President Obama is successful in getting HARP 3.0 and the “Obama Refi” aka #MyRefi programs that he pushed for in his first term, approved and available for those who need to refinance and do not qualify for HARP 2.0 or streamlined refinances, such as FHA, VA or USDA.
Here are some of the economic indicators scheduled to be released this week:
Tuesday, January 22: Existing Home Sales
Thursday, January 24: Initial Jobless Claims
Friday, January 25: New Home Sales
If you are considering buying a home or refinancing a home located in Seattle, Sammamish, Gig Harbor or anywhere in Washington state, I’m happy to help you! Click here if I can provide you with a no-hassle mortgage rate quote.
A petition to remove the securitization date with HARP 2.0 is making it’s way through social media. Currently, in order for a mortgage to qualify for a Home Affordable Refinance (HARP 2.0), the mortgage needs to have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. Securitization has nothing to do with when a loan closed and it often takes place weeks or sometimes months after closing.
Many home owners have felt burned by this cut-off date as they have no control over when Fannie or Freddie securitized their loan yet they’re being punished by not being allowed to use this program to refinance.
The petition is also asking the home owners who have already refinanced using the HARP program, to be allowed to “re-HARP” or refinance again under the HARP program.
Congress and the Obama Administration has been discussing the possibility of changing guidelines to the Home Affordable Refinance Program, including removing or extending the securitization date among other things. The revamped program, which may also be open to loans not securitized by Fannie or Freddie, has been referred to HARP 3.0 or #MyRefi.
The petition was created last week is trying to reach 25,000 signatures by February 8, 2013.
Under the Home Affordable Refinance Program (HARP) The Director of The Federal Housing Finance Agency has authority to extend or eliminate the eligibility cutoff date. Currently the date is set as 5/31/09. Many responsible home owners are unable to take advantage of the program to reduce their mortgage rates because of this date. On 3/17/12 HARP was revamped (HARP 2.0) and home owners were given the power to shop for the best rates. However, those who previously refinanced under the original program are not eligible because of the the arbitrary cut off date and 1 time use limit set by FHFA Director Edward DeMarco. Eliminating the cutoff date and allowing home owners a 2nd chance to refinance under HARP 2.0 would help millions of Americans to save money on their monthly mortgage payment.
The WSJ reports that the Obama Administration is “eyeing” a refi program that would allow underwater home owners who currently do not qualify for HARP 2.0 to refinance their homes. Currently in order to qualify for the Home Affordable Refinance Program (aka HARP 2.0) the existing mortgage must be securitized by Fannie Mae or Freddie Mac and the “securization” must have taken place prior to June 1, 2009.
According to the article, White House officials and the Treasury would like to include mortgages that were not securitized by Fannie Mae or Freddie Mac. This program would possibly include non-conventional, “alt-a”, subprime and mortgages held by private lenders. There is no mention of expanding or removing the securitization date requirement in WSJ’s article, which many homeowners are desperately hoping for (also known as HARP 3.0).
In order for these expanded refi programs to be a reality, using Fannie Mae or Freddie Mac, Congress and the FHFA must approve them. When and IF this happens, I’ll be sure to announce that here at Mortgage Porter.
With the re-election of President Obama, in my opinion, the odds of HARP 3.0 becoming a reality improved. HARP is an acronym for the Home Affordable Refinance Program. HARP was created to help home owners who would qualify to take advantage of today’s extremely low mortgage rates and refinance except their homes have lost equity. HARP is available for mortgages that were securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. We are currently on version “HARP 2.0” which was offered expanded guidelines from when HARP first rolled out. For more information about HARP 2.0, click here.
At the beginning of this year, HARP 2.0 was expanded in phases to make the program more available for employed and credit worthy home owners. Fannie Mae and Freddie Mac reduced the requirement for appraisals and made efforts to make the program more for banks and lenders to offer. However, many banks and lenders have not fully adopted HARP 2.0 guidelines as created by Fannie Mae and Freddie Mac. Some will only offer HARP 2.0 home owners who currently have their mortgage serviced by that bank (where they make their mortgage to). And some lenders have limited what types of HARP 2.0 loans they will accept, for example, refusing to offer HARP 2.0 on loans that have existing private mortgage insurance or LPMI. Or by adding overlays to loans they will accept with limits to loan to value or not accept Fannie Mae or Freddie Mac appraisal waivers. Some wholesale lenders are offering HARP 2.0, however, the demand is so great for these borrowers that it’s not unusual for HARP 2.0 refi’s to take several months to close. In fact a couple of the these wholesale lenders who were accepting HARP 2.0’s with higher loan to values or pmi have either stopped accepting applications until they can catch up with what they currently have in process.
President Obama and members of Congress have been pushing for a refinance program that would go beyond HARP 2.0. This program has been nick-named HARP 3.0 and has been assigned a hashtag of #MyRefi by the White House.
It is anticipated that HARP 3.0 will have many of the same features available with HARP 2.0 along with:
- expanding or eliminating the Fannie Mae/Freddie Mac securitization cut-off date of May 31, 2009;
- open to mortgages that are not securitized by Fannie Mae or Freddie Mac, including qualified borrowers who used jumbo, subprime or other alternative programs.
- allow borrowers who have refinanced under earlier versions of HARP to refinance again;
- expand loan amounts to previous conforming high balance limits. Borrowers in the greater Seattle area with loan amounts at the previous conforming high balance limit of $567,500 may qualify for HARP 2.0, however, they often need to bring in cash to close with the current King County loan limit set at $506,000.
President Obama’s refi plan would probably look more like an FHA refinance and would be available to home owners who have lost equity in their home and have made their mortgage payments on time for the last six months. President Obama has been pushing for programs to become more available to home owners so they they can take advantage of today’s lower rates and help our economy.
When and if HARP 3.0 #MyRefi becomes available to Washington home owners, I will be sure to announce it here! To stay informed, you can subscribe to my blog, follow me on Twitter or “like” me on Facebook. For a mortgage rate quote or to start a loan application for a refi on your home located any where in Washington state, where I’m licensed, please click one of the links above.
It’s looking like we may eventually see HARP 3.0. This past week, President Obama has issued a “To Do List” for Congress which includes taking steps to make it easier for more Americans to refinance. President Obama says the average homeowner will save $3000 a year by taking advantage of today’s historically low mortgage rates, which would not only help housing, it helps the economy.
Obama’s refi plan is not new – he’s been pushing this for a few months. If adopted, it would allow “responsible home owners” who do not qualify for HARP 2.0 and are underwater to refinance using an FHA loan. The low payments the White House is using for examples, do not seem to be factoring FHA’s mortgage insurance premiums, which would offset some savings. However, even with the mortgage insurance, many homeowners would benefit from the “Obama refi”.
President Obama is also promoting shorter term mortgages which helps home owners build equity quicker. I hope HUD is paying attention to this. Perhaps they’ll remove the “net tangible benefit” requirements which prevents home owners with FHA insured mortgages from doing an FHA streamline refi from a 30 year fixed FHA insured loan to a 15 year FHA loan – even if the homeowner qualifies for the higher payment! Currently, with an FHA streamlined refinance, the PIMI payment (principal, interest and mortgage insurance) must be lower by 5%. This is our government looking out for us. Again, I’m hoping this changes in light of recent comments by President Obama.
Senators Menendez and Boxer has introduced the “Responsible Homeowner Refinancing Act of 2012” in support of President Obama’s To-Do List.
The proposed bill would make the Home Affordable Refinance Program more accessible to underwater home owners by increasing competition. Currently it can be challenging for home owners to find lenders who are willing to go beyond the 105% limits as banks have limited what they’ll allow lenders to do. Mortgage Master Service Corporation recently added lenders who allow us to provide Washington home owners HARP 2.0 refinances without loan to value restrictions.
On Monday, NAMB shared information (via Rob Chrisman) that the proposals would “extend the HARP eligibility date to May 31st 2010. (The bill mentions that May 31st 2010 was chosen because most of the loans originated after this date already have a mortgage rate below 5%.)”. This would greatly help home owners who just missed the cut-off date of May 31, 2009. With any luck, HARP 3.0 will be based on the closing date of the mortgage instead of when Fannie or Freddie securitized the loan!
If you would like a detailed mortgage rate quote for your home located anywhere in Washington state, please contact me. Remember, HARP is available for your primary residence, second home, vacation property and investment homes as long as they were securitized by Fannie Mae or Freddie Mac prior to June 1, 2009.
If you currently qualify for HARP 2.0, I don’t recommend waiting for HARP 3.0. It may not happen and bank overlays seems to change almost daily on what loan to values they’re willing to go to.
On last week’s State of the Union Address, President Obama announced a plan to help underwater homeowners who do not qualify for a Home Affordable Refinance. In order to qualify for a Home Affordable Refi (aka HARP 2.0) the home owner’s mortgage needs to have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009 and meet other qualifications. If the home owner currently has a jumbo loan, they are instantly disqualified for HARP 2.0. since jumbo mortgages are non-conforming (not Fannie or Freddie programs). HARP is also restricted by existing conforming loan limits and in the greater Seattle area, the current conforming loan limit is $506,000. Even if you have a conforming loan amount of $567,500 (last year’s conforming loan limit in Seattle), current HARP guidelines limit you to a $506,000 loan amount.
President Obama’s proposal is to help underwater home owners who have made their mortgage payments on time and who do not qualify for HARP 2.0 is to allow them to have an FHA insured mortgage without an appraisal. FHA insured mortgages have different loan limits than conforming. In the Seattle area, the FHA loan limit is $567,500. Obama’s new refi program, should it come to fruition, will be limited to FHA loan amounts.
FHA mortgages are a great program, however they’re also very expensive when compared to conventional loans. This is because they have both upfront and monthly mortgage insurance fees, which are constantly being raised by Congress. FHA mortgages have both upfront and monthly mortgage insurance regardless of the loan to value of the property.
As of 8:30 this morning, an FHA rate on a loan amount of $567,500 in Seattle – Bellevue with a 720 or higher credit score is 3.750% for a 30 year fixed rate (apr 4.767). Principal and interest with the financed UFMIP is $2,654.46 and the monthly mortgage insurance premium is an additional $515.85 for a total (PIMI) payment of $3,170.31, not included property taxes and insurance. This PIMI payment equals an interest rate in the low-to-mid 5% range if you compare it to a conventional mortgage.
This program is also costly as Obama plans to pay for it by charging banks additional fees and we all know that this trickles down to the consumer. The Temporary Payroll Tax illustrates how banks have increased mortgage rates AND the cost to extend a rate lock commitment.
It’s reported that the new program will not require an appraisal or proof of income and will be available for primary residences only. Employment will need to be verified and mortgage payments must have been made on time for the last 6 months. Although this is “Obama’s Refi Plan”, we have to wait and see if Congress approves it and how the big banks and lenders will embrace this program.
If you currently have an FHA insured mortgage, you don’t need to wait and see if Obama’s refi plan will help you. You may already be able to refinance with an FHA streamlined refi without an appraisal.
If you are interested in a mortgage for a home located anywhere in Washington state, I’m happy to help you! I have been originating all types of loans at Mortgage Master Service Corporation since 2000. Click here for your no-hassle mortgage quote on your Washington property.