What You Need to Know about HARP 2.0: the Home Affordable Refinance Program

November 16, 2011 by Leave a Comment

Yesterday, we received more details about the new and improved Home Affordable Refinance Program (HARP 2.0) which is available for home owners who have a conventional mortgage that was securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. (Securitized is different than your close date and takes place sometimes several weeks AFTER your loan has closed).  

I've written more information about HARP 2.0 here.  HARP 2.0 removes the loan to value cap of 125% and allows some transactions to take place without an appraisal. If your mortgage qualifies for this refinance program, it is well worth your time to obtain a rate quote to see if you can reduce your mortgage payment, shorten your term or fix your adjustable rate mortgage. If your home is anywhere in Washington State, I can help you with your home affordable (or any) refinance.

Here's what you need to know about HARP 2.0:

  • HARP 2.0 is effective for loan applications dated December 1, 2011 or later. Here's what you can do to prepare while you wait to apply for HARP 2.0.
  • For your primary residence, if you opt for a 20 year fixed term or shorter, there are no additional hit to fees (LLPA – risk based pricing). Should you select a 30 year fixed term, the "hit" to fee is limited to 0.75%.  Read more about Fannie Mae's LLPA's here.  What this means in a nut-shell is that HARP 2.0 will have lower rates than other conventional (non-harp) refis.  
  • Fixed rate mortgages will not have the 125% loan to value restriction (no maximum loan to value); however should you opt for an adjustable rate mortgage, the maximum loan to value will be 105%. [update: higher loan to values will be increased in phases for this program].
  • No mortgage lates are allowed during the last six months and only one late payment allowed during the last year (seven to twelve months ago).
  • YOU  DO  NOT  HAVE  TO  RETURN  TO  WHERE  YOU  MAKE  YOUR  CURRENT MORTGAGE  PAYMENT  TO  FOR  YOUR  NEW  HARP 2.0  REFINANCE.  …Yes, I'm shouting 🙂  If your home is located anywhere in Washington State, I can probably help you with your refinance. However…
  • Borrowers who currently have LPMI (lender paid mortgage insurance) need to return to their current mortgage servicer (who they make their mortgage payments to) for a HARP 2.0 refinance.
  • HARP is available for owner occupied, second or vacation homes and investment properties. It's okay if the occupancy type has changed from when you obtained your last mortgage. If your previous primary residence is now a rental, this is acceptable with HARP.
  • Condos should not require additional review as long as there is adequate insurance coverages in place for HARP 2.0.
  • HARP loan amounts are limited to current conforming loan limits and does not grandfather the previously higher "temporary" loan limits. The conforming loan limit in the greater Seattle area for a single family dwelling is $506,000 through 2012.
  • A Borrower may be removed from a HARP refinance (divorce, etc.) as long as they can document that the remaining borrower has been making the mortgage payments with their own funds the past 12 months. (This is not a new guideline). If the refinance's purpose is to "buy-out" the borrower, it will not qualify for a HARP refinance.
  • A few borrowers who previously refinanced using HARP may be able to refinance using HARP 2.0 (loans acquired by Fannie Mae between March 1, 2009 and May 31, 2009).
  • If you have a second mortgage or HELOC, the second lien holder still needs to approve the refinance and agree to be subordinated.

So now we wait for December 1st and for our wholesale lenders and banks to adopt Fannie and Freddie's revised HARP 2.0 guidelines. Here is what you can do to get ready before you apply on December 1, 2011.  We are preparing to accommodate your request for HARP 2.0 rate quotes and transactions – the more prepared you are will make your transaction progress more smoothly.

We are now accepting requests for HARP 2.0 rate quotes for homes located anywhere in Washington State. You are welcome to submit a rate quote request, which will be sent to you once the new HARP 2.0 rates are available (December 1, 2011 and later).

NOTE: For HARP 2.0, we are pleased to offer Fannie Mae DU Plus and Freddie Mac Open Access for Home Affordable refinances.

Filed Under: HARP - Home Affordable Refi, Refinance

Thank YOU, Veterans

November 11, 2011 by Leave a Comment

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As General Colin Powell said in an interview last night, "every day should be Veterans Day".  A heartfelt thank you to those who serve our Country and their families.

Mortgage Master Service Corporation is closed today in observance of Veterans Day.

Filed Under: Current Affairs

Before You Go to Your Signing Appointment [Updated]

November 10, 2011 by 8 Comments

EDITORS NOTE: With the introduction of CFPB’s Loan Estimate and Closing Estimate, some of the information below may not apply if your loan application was originated October 3, 2015 or later as the 2010 Good Faith Estimate and HUD-1 Settlement Statement have been retired. Watch for an updated post soon!  Click here for the updated post.

When I originally wrote this post back in January 2007, we didn’t have the Good Faith Estimate that HUD created and implemented in 2010. Although this GFE has caused greater confusion and has overall been a failure (a new version is should be available in 2012), the one positive feature about the 2010 GFE is that lenders are bound by what they quoted on their last Good Faith and page three of the HUD-1 Settlement Statement clearly compares what was quoted by the Mortgage Originator and what the final fee at signing is. In addition, there are certain tolerances that limit how much more a fee at closing can be for some of the lender fees.

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Filed Under: Escrow and closing Tagged With: ,

What’s Moving Mortgage Rates, November Holidays and More!

November 8, 2011 by Leave a Comment

Europe continues to impact our markets as we watch the drama in Greece and Italy continue to unfold. It's amazing to some that something that is happening so far away may impact your mortgage rates. This is because mortgage rates are based on mortgage backed securities (bonds) and investors will either seek the safety of bonds over stocks when stocks are deteriorating or will opt for stocks and sell bonds when a better return is available. Basically, bad economic news tends to be good for mortgage rates (not so good for our retirement accounts) and good news, as well as inflationary data, tends tends to drive mortgage rates higher. 

This afternoon, we'll have the results of a $32B auction of 3-year Treasury Notes.  We don't have any major economic reports scheduled to be released until Thursday, November 10th, with the weekly Initial Jobless Claims. On Friday, we have Consumer Sentiment from the University of Michigan.  On Friday, the bond markets will be closed in observance of Veterans Day.

Something else to keep in mind with November is that it is a shorter month as we are beginning "the holiday season". Some of these holidays may impact your refinance waiting periods or when you may be able to close.

Friday, November 11, 2011 is Veterans Day.  Veteran’s Day is a federal holiday, therefore, this date cannot be included when counting the waiting period for rescissions for refi's, MDIA (initial waiting period and re-disclosure waiting period) or HVCC.  In addition, this date is not counted in the 3 day disclosure requirement for initial disclosures or re-disclosures.  Banks, county courthouses, and Mortgage Master Service Corporation will be closed for business on Friday, 11/11/11.

Thursday, November 24, 2011 (Thanksgiving):  Thanksgiving is a federal holiday, therefore, this date cannot be included when counting the waiting period for rescissions, MDIA (initial waiting period and re-disclosure waiting period) or HVCC.  In addition, this date is not counted in the 3 day disclosure requirement for initial disclosures or re-disclosures.  Banks, the post office, the county courthouses, and Mortgage Master Service Corporation will be closed for business on Thursday, 11/24/11.

Friday, November 25,2011:  This is NOT a federal holiday.  While courthouses and Mortgage Master Service Corporation are closed, this date can be included in the waiting period for rescissions, MDIA (initial waiting period and re-disclosure waiting period) or HVCC.  In addition, this date is counted in the 3 day disclosure requirement for initial disclosures or re-disclosures.

Also in November… 

In a few weeks we should have more details about HARP 2.0 and learn what 2012's loan limits will be for Conforming and FHA loans.  And hopefully this month, there will be decision on the VA funding fee, which was earlier reduced and then retracted. It's quite possible that conforming and FHA loan limits may be reduced further – we really have no idea what Congress is going to agree on at this time.  Currently the conforming and FHA loan limits in King, Pierce and Snohomish County is $506,000 (reduced from $567,500 on October 1, 2011).   If you have a "high balance" loan amount and are considering refinancing or buying, you may be gambling becoming a "jumbo loan" with each day you wait.  

If you have questions or need help with a mortgage on a home located anywhere in Washington, please contact me.  I am a Licensed Mortgage Originator who not only provides information to consumers via my blog, I help people with homes in Seattle, Redmond, Tacoma, Everett and beyond with their refinance and home purchase mortgage needs. I also adopt mortgages. If you haven't heard from your mortgage originator in the last six months, it's quite possible they are either no longer licensed or may have chosen another career. If your home is in Washington, and you would like to be treated like one of my clients (added to may mailing list, receive updates and a review of your current mortgage – no refinance or new mortgage is required) please contact me.

Filed Under: Current Affairs

It’s time for HUD to revamp the FHA Streamlined Refi

November 2, 2011 by Leave a Comment

HUDHUD's Shaun Donovan was recently promoting Obama's jobs bill and the recently revised the Home Affordable Refinance (aka HARP 2.0).  Fannie and Freddie have revamped the Home Affordable Program to reduce the closing cost and eliminate the need for an appraisal on many qualified homes.

From Donovan last week on HARP for conventional refinances:

"…There are still millions of Americans who have worked hard and acted responsibly, paying their mortgage payments on time. But because their homes are worth less than they owe on their mortgage, they can’t refinance….

Just yesterday, the FHFA announced changes that will help more responsible borrowers take advantage of today’s low mortgage rates. These changes will knock down barriers such as closing costs and fees that can sometimes cancel out the benefit of refinancing altogether.

And by creating more competition so that consumers can shop around for the best rates, these changes will save homeowners on average $2,500 per year — that’s the equivalent of a pretty good-sized tax cut…"

With HUD promoting HARP 2.0, I'm hoping that they're taking a strong look at their own FHA Streamlined refinance.  FHA streamlined refi's already do not require an appraisal as long as the loan amount is not being raised over the balance of the existing FHA loan.  

The problem with the FHA streamlined refinance is that with the last adjustment to FHA's annual mortgage insurance and funding fee, it's more difficult to have these refi's pencil out. The annual premiums are so much higher than past insurance premiums that despite today's much lower rates, the higher insurance fees often cancel out the reduced rate benefit. Seattle area and other home owners who are not underwater with their home values may be able to switch to a conventional mortgage (with or without private mortgage insurance depending on the loan to value) and an appraisal will be required to prove the current value of the property.

In my opinion, with FHA streamlined refi's, HUD should either allow a reduced mortgage insurance rate for streamlined refi's and perhaps not offer a credit of the remaining upfront mortgage insurance premium. VA's IRRL loans offer a reduced funding fee of 0.5% for refi's.

Another option would be for HUD to allow the FHA borrower to refinance their FHA mortgage with the same FHA mortgage insurance premiums of their current FHA loan.  

HUD should also make it easier for borrowers with FHA ARM's to be able to do a streamlined refi into a fixed rate program.  Current guidelines require a reduction in payment of 5% and a caps the interest rate at no more than 2% higher than the ARM. If the borrower qualifies for the higher payment and they are opting for a fixed rate program, they should be allowed to do so.  Currently this eliminates borrowers from being able to streamline refi from an adjustable rate to a 15 year fixed.

HUD already has the risk with the loan, why not help Americans with FHA insured loans reduce take advantage of this current low rate environment by making FHA streamlined refinances more feasible? 

Mr. Donovan, it's time for HUD to knock down barriers such as closing costs and fees that can sometimes cancel out the benefit of refinancing altogether for FHA streamlined refinances.

EDITORS NOTE: This post was updated 11/21/2011 with the addition of the paragraph addressing changing the requirement for a steamline refinance out of an adjustable rate.

Filed Under: FHA, Opinion

Mortgage Master Service Corporation receives Outstanding Lender Award

October 28, 2011 by Leave a Comment

MmscawardI'm very proud of my employer, Mortgage Master Service Corporation, the Porter family and my co-workers for being recognized last night at the Washington Association of Mortgage Professionals (WAMP)  2011 Leadership Awards for Outstanding Lender (retail mortgage company).  

Mortgage Master Service Corporation was established in 1976 by the Porter family (my in-laws) and it was such an honor to be there with Marilyn Porter, President of Mortgage Master, and my sister-in-law, to receive the award.

I'm honored to be one of four finalist for Outstanding Mortgage Originator in Washington State by WAMP.

Congrats to all the nominees and those who took home awards last night. It was a fun evening made extra special by enjoying it with my sister, Nicole Christy, Frank Garay and Brian Stevens, Anny Havland as just few of the fine folks at our table. And it was nice to so many old friends after being in the industry for 25 years.

Photo credit: Nicole Christy (my sister and Account Executive at Kinecta Credit Union).

Filed Under: Events

Washington Association of Mortgage Professionals honors the “Best of the Best” Tonight

October 27, 2011 by Leave a Comment

Tonight the Washington Association of Mortgage Professional is celebrating their 25th anniversary with a formal awards gala recognizing individuals and companies who have been nominated by their peers as being the best in Washington.

I am honored to be one of four finalist for Outstanding Mortgage Originator and that my employer, Mortgage Master Service Company is one of three mortgage companies in the state being recognized as an Outstanding Retail Lender. Mortgage Master Service Corporation is owned and managed by my in-laws, so I'll be attending tonight's event with my sister-in-law and President of Mortgage Master Service Corporation, Marilyn Porter. The family affair continues as we'll be sitting at my sister's table, Nicole Christy, who's an Account Executive for Kinecta Credit Union.

It's going to be a special evening regardless of who leaves the event with an award.

WAMP's Leadership Awards Gala begins tonight at 6:00 pm at the Renaissance Hotel in Seattle.  More info here.

Filed Under: Interest Rates

Announcing the New & Improved Home Affordable Refinance Program (HARP 2.0)

October 24, 2011 by Leave a Comment

We've been waiting to see what the "new Obama refi program" would be and this morning, the Federal Housing Finance Agency published a news release announcing new changes with the goal of reaching more borrowers. Home Affordable refinances are available to home owners who have a mortgage that is securitized by Fannie Mae or Freddie Mac on or before May 31, 2009. 

Here are some of the changes that are being made to HARP:

  • Removing the 125% loan to value ceiling for fixed rate mortgages. If refinancing into an adjustable rate mortgage there is a 105% cap.
  • Eliminating the appraisal where there is reliable AVM estimate available. Currently some Fannie Mae HARP refi's have qualified to have appraisals waived, it appears this may become more of the norm with HARP refi's.
  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and reducing fees for other borrowers;
  • Extending the end date of HARP until December 31, 2013 for loan originally sold to Fannie or Freddie on or before May 31, 2009 (note – the date a loan was sold to Fannie or Freddie is different than the date you closed on your refinance).

Borrowers must be current on their mortgage payments with no late payments in the past 6 months an do not have more than one late payment in the past 12 months.

HARP refinances are available for single family dwellings and condos as well as owner occupied, second homes and investment properties.

You DO NOT have to use your current mortgage servicer (who you currently make your mortgage payments to) for your Home Affordable Refinance unless you currently have private mortgage insurance. If your home is located anywhere in Washington State, I can help you with your mortgage needs.

If you have been turned down for a Home Affordable refinance because of a low appraised value and you otherwise qualified – this is your second chance!

More information is to be available by November 15, 2011.  Stay tuned!

UPDATE: Here are some tips for preparing for your HARP 2.0 refinance BEFORE you apply.

Filed Under: Fannie, Freddie and FHFA, HARP - Home Affordable Refi, Refinance
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