Freddie Mac HARP 2.0 Loans Getting Tougher

July 12, 2012 by 15 Comments

One of the lenders that we work with for Freddie Mac HARP 2.0 refi’s has announced today that they are not accepting applications for loans locked after July 20, 2012.

The bank states they’re doing this to get a handle on their pipeline. If you’re in the process of refinancing via HARP 2.0 and you have a loan to value that exceeds 105%, you may already know that the process seems to be taking a couple months.

If you qualify for a HARP 2.0 refinance: if you have lost equity in your home and your current mortgage is securtized by Freddie Mac prior to June 1, 2009 – please do not delay starting your HARP 2.0 refinance… your options may be dwindling.

If your home is located in Washington state, I’m happy to help you with your refinance.

Filed Under: HARP - Home Affordable Refi Tagged With: , ,

Has your Bank turned down your refi?

July 5, 2012 by 1 Comment

IStock_000014142621XSmallIn a time when one might assume that their bank would work with them to refinance their home, many Washington homeowners are finding quite the opposite. I’m hearing from local homeowners who have made their mortgage payments on time and who qualify for refinance (income, employment and assets) yet their bank is either unwilling to provide the refinance or is taking several months to close it.

For example, several large banks will only do FHA streamline refinances on mortgages they currently service.  You can have your checking and savings accounts any of these banks, but if they don’t currently service your mortgage, it’s my understanding they will not assist you with your FHA streamlined refinance.  NOTE: We can help you refinancing your FHA streamlined mortgage from any bank as long as your home is located in Washington.  

Banks are also being very selective when it comes to HARP 2.0 (home affordable) refinances. Some are electing not to help mortgages they currently service because of lpmi (lender paid mortgage insurance) or pmi when many of these loans are eligible to refinance. 

Bottom line, if your bank or mortgage servicer has turned down your refinance (or if they’re stalling the process) and your credit, income and assets are good: get a second opinion.  

If your home is located anywhere in Washington state, I’m happy to review your scenario. I’ve been originating and closing refinance and purchase mortgages at Mortgage Master Service Corporation since April 2000. 

Filed Under: FHA, HARP - Home Affordable Refi, Refinance Tagged With: , , ,

FHA Streamlined Refi Revamped and Revisited

June 14, 2012 by Leave a Comment

There is a lot of interest in the FHA streamlined refinance since HUD has greatly reduced the mortgage insurance premiums for some home owners who originated their existing FHA mortgage May 2009 and earlier. FHA streamlined refinances are designed to reduce mortgage payments and borrowers are not allowed to take “cash out” or pay off existing helocs or second mortgages. In order to qualify for an FHA streamlined refiance, the borrower must have made at least six payments on the FHA loan and needs to be current with the mortgage.  Here are a few tips on FHA streamlined refinances I thought I’d share with you.

No appraisal required. If you opt to not have an appraisal, then your new loan amount may not exceed your current loan amount. This means that your closing cost and prepaids/reserves cannot be financed (upfront mortgage insurance is still allowed to be rolled into the loan). Closing cost and prepaids/reserves may be paid for with interest rate rebate credit or cash at closing.  If you opt to have an appraisal, then your loan amount may be increased.

Credit qualifying vs non credit qualifying.  FHA streamline refi’s may not require verification of your income or assets (non-credit qualifying). Did you know that you may qualify for improved pricing if you opt for a credit qualifying FHA streamlined refi? Pricing varies throughout the day and when I’m locking an FHA streamlined refi for a Washington area homeowner, if pricing is the same, I’ll opt for non-credit qualifying. However if pricing is improved for a credit qualifying streamlined refinance, I’ll advise my client of the pricing differences and let them decide which route they prefer.

Underwriting overlays. Although HUDs guidelines might state something different, the banks and lenders we work with allow us to help home owners who have a low-mid credit score of 640 or higher. If your credit score is below 640, you may want to consider working directly with your bank.

Net tangible benefit. HUD requires that the loan “makes sense” and that is defined as a reduction in your mortgage payment (principal, interest and mortgage insurance) of at least 5%. It may also mean refinancing your FHA ARM into an FHA fixed rate product. Unfortunately, if you’re refinancing an FHA 30 year to a FHA 15 year fixed rate product, and your payment does not go down by 5%, you will not meet the current “net tangible benefit” requirement – even if you’re doing a “credit qualifying” FHA streamlined refinance and fully disclosing your income. This is something HUD needs to correct, in my opinion.

Reduced mortgage insurance premiums. HUD has announced reduced mortgage insurance premiums (both annual and upfront) for FHA loans that were endorsed (insured) by HUD prior to June 1, 2009.  FHA loans are endorsed by HUD after closing – sometimes several weeks after closing so it’s possible your FHA mortgage closed in May of 2009 and not endorsed until after the cut-off date.

Credit of your existing upfront mortgage insurance premium (UFMIP). If your existing FHA insured mortgage was originated over the past three years, it may not quaify for qualify for the reduced mortgage insurance, however, you probably will receive a refund of a portion of the original UFMIP. The refund is credited towards the closing cost of your new FHA loan and ranges from 80% to 10% of the original UFMIP by the 36th month.

FHA streamlined refinances are available for non-owner occupied homes too! If you have a home that has been converted to a rental property and the underlying mortgage is FHA, it’s eligible for an FHA streamlined refinance as long as the owner occupied it for a least 12 months.  With a non-onwer occupied FHA streamlined refinance, it must be done without an appriasal so no closing cost may be financed (except the upfront MIP).

If you are interested in refinancing your existing FHA insured mortgage on a home located anywhere in Washington, I’m happy to help you. I’ve been originating FHA home loans at Mortgage Master Service Corporation since April 2000, where we have in house FHA underwriters at our main office in King County.  Click here for your FHA rate quote.

Filed Under: FHA, Investment Property, Refinance Tagged With: , , , , , ,

HARP 2.0 Questions to ask your Mortgage Originator

June 9, 2012 by 9 Comments

HARP 2.0 (Home Affordable Refi Program) was revamped late last year to remove loan to value restrictions allowing more underwater home owners to refinance. So you may be wondering, why should you need to ask your mortgage originator if they have any loan to value restrictions with the HARP 2 program. In two words: UNDERWRITING OVERLAYS.

HARP 2.0 overlays are underwriting guidelines that are in addition to Fannie Mae or Freddie Mac’s program guidelines. Underwriting overlays are mandated by the bank and/or lender.  For example, as a correspondent lender, I work with several big banks, wholesale lenders and I can broker loans too. Currently most of the banks I work with have underwriting overlays that limit my maximum loan to value with HARP loans anywhere from 95 to 105% depending on the bank and scenario. Thankfully I also work with lenders who offer unlimited loan to values with no underwriting overlays for HARP 2.0, as the program was intended to be. 

Before you submit a loan application for HARP 2.0, ask the mortgage originator what is the max loan to value they can lend on.  If they are limited to 105% and your loan to value exceeds 105%, find another mortgage originator. HARP guidelines have an 105% ltv limit on adjustable rate mortgages and loans with a term greater than 30 years.

If you have PMI or LPMI, ask your mortgage originator if they are accepting transferred pmi BEFORE you start your application. Many lenders are not accepting HARP loans with existing pmi or lpmi (lender paid mortgage insurance). If you’ve been told this by your bank, seek another lender.

There are some scenarios where because of certain “credit enhancements” a loan may not be available for a HARP 2.0 – it’s more the exception than the norm.  And I’m hoping when (if) HARP 3.0 becomes available, those loans are allowed to take advantage of this program.

If your LO has told you that an appraisal is required, get a second opinion. Appraisal waivers are not automatically provided on all HARP 2.0 loans. It is not determined until your loan is ran through Fannie Mae or Freddie Mac’s automated underwriting systems (DU or LP) whether or not an appraisal is required. Sometimes the smallest detail may impact whether or not an appraisal waiver is granted, such as how your address is entered into the AUS. You many not need to spend money on the appraisal and it’s possible that you may receive an appraisal waiver at a later date as the valuations that Fannie and Freddie use change.

Because of the increased refi volumes created by expanded guidelines with HARP 2.0 and the reduced mortgage insurance now available for some FHA streamlined refi’s, banks and lenders are “cherry picking” what refinances they want. One way of doing this is by creating underwriting overlays. Due to these increased volumes, large banks and credit unions have hired on loan originators (or “mortgage tellers”) who may lack experience in the mortgage industry. (Remember, LO’s who work for banks or credit unions are not required to be licensed per the SAFE Act). They’re simply hired to fill out an application and are not savvy to actual guidelines.

I’ve been helping home owners who have been told by a mortgage originator that because they have pmi or their loan to value is 108%, that they don’t qualify for HARP 2.0 when actually, they do.  I’m not sure if LO’s don’t read Fannie/Freddie guidelines or if because they cannot offer it, they prefer to portray certain features are not available when what they should do is convey that they do not have access to those features (such as ltv’s over 105%), however another lender may.

If you’re considering refinancing or buying a home located anywhere in Washington, I’m happy to help you.  Click here if you would like me to provide you with a mortgage rate quote.

EDITORS NOTE: Since this was published, most of the banks we work with as a correspondent have pulled back their LTV guidelines to 105%. Wholesale lenders where we can broker have also made changes to guidelines or policies or have stopped accepting applications due to extreme volumes. Hopefully Congress will pass HARP 3.0 to help the Home Affordable Refi become more available. 

Filed Under: HARP - Home Affordable Refi, Refinance Tagged With: , , , , , ,

HARP 2.0 and Private Mortgage Insurance

May 11, 2012 by 2 Comments

The Home Affordable Refi Program (HARP 2.0) is a refinance program to help home owners who have lost home equity take advantage of today’s historic low interest rates.  In order to qualify for this program, the existing mortgage must have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009.  Learn more about the HARP 2.0 program here.

Loans with private mortgage or lender paid mortgage insurance (LPMI) who meet the securitization requirement are also eligible for HARP 2.0. The terms of the private mortgage insurance, as far as the rate, remains the same as what the home owner has on their existing loan. The existing coverage is transferred to the new HARP 2.0 mortgage if the coverage is still in effect.

Borrower Paid Mortgage Insurance (bpmi) is the most traditional form of mortgage insurance. Homeowners will see this in their monthly mortgage payment. If you currently have private mortgage insurance included in your monthly mortgage payment, you will have it in your new HARP 2.0 mortgage payment too. 

Lender Paid Mortgage Insurance (lpmi) is not “seen” in your mortgage payment. LPMI is essentially financed into your loan. Homeowners who have LPMI probably traded the monthly pmi payment for a slightly higher interest rate when they obtained their last mortgage with a loan to value greater than 80%. Often times, LPMI scenarios offered lower payments than bpmi or combo loans at the time they were originated.

Some mortgages with LPMI were “single premium” meaning the coverage was paid for in one lump “single premium”.  Single premium LPMI may be transferred to a new HARP 2.0 mortgage. 

It’s also possible that the existing LPMI may be paid monthly by the lender. In this case, the private mortgage insurance company may be able to convert the “LPMI” from “lender paid” to “borrower paid”.  The borrower is trading their higher rate mortgage with LPMI for a much lower rate with monthly pmi in their mortgage payment. The monthly savings has been significant.

It’s my understanding that once PMI is transferred to a new HARP 2.0 mortgage, private mortgage insurance companies consider this a new loan. This means that when the pmi may drop off is reset. Typically pmi drops off your mortgage when your loan to value reaches 78% of the mortgages loan to value based on the appraised value.  If your home is significantly underwater, the private mortgage insurance will likely remain until you can refinance.  PLEASE DO NOT LET THIS STOP YOU FROM GETTING A HARP 2.0 QUOTE. Mortgage rate quotes are free and it’s doesn’t hurt to find out what your options are.  Click here for your HARP 2.0 quote for your home located anywhere in Washington state.

Here are two scenarios from quotes I provided yesterday, May 10, 2012, for HARP 2.0 mortgages with existing lender paid mortgage insurance (both borrowers have excellent credit):

Owner occupied home in Federal Way with a loan amount of $283,000 and an estimated value of $186,000 with LPMI single premium. With 30 year fixed mortgage and a rate of 4.375% (apr 4.515) they are reducing their monthly mortgage payment by $459 per month!

Owner occupied home in Renton with a loan amount of $311,000 and an estimated value of $215,000 with LPMI that was being paid monthly by the lender. 30 year fixed mortgage and a rate of 4.500% (apr 4.569%) they are reducing their monthly mortgage payment by $422 even with the lpmi converted to borrower paid.

NOTE: The difference in rate above due to having a mortgage priced with discount or rebate. How you have your mortgage priced (with discount or rebate credit) is up to you!

If you would like me to provide you a quote for your HARP 2.0 refinance on your home located anywhere in Washington, please click here.

I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington…and yes, I would love to help you with your HARP (or any) refinance:

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

www.freddiemac.com/mymortgage or

http://www.fanniemae.com/loanlookup/


Filed Under: HARP - Home Affordable Refi, Mortgage Insurance Tagged With: , ,

What are your odds of getting a HARP 2.0 refinance?

April 4, 2012 by 1 Comment

UPDATE SEPTEMBER 4, 2012: Odds are back to being a little tricky if you have a Freddie Mac securitized mortgage….bummer!  Most of my lenders are limiting us to 105% LTV for Freddie Mac and unlimited LTVs for Fannie Mae.

UPDATE MAY 12, 2012: ODDS ARE GREATLY IMPROVED!  We are now working with several lenders who are allowing expanded (unlimited) loan to values, including mortgages with existing private mortgage insurance and lpmi (as long as the mortgage insurance can  be transferred).  For a quote on a HARP 2.0 refi for your home located in Washington, please contact me.

Many home owners who have been patiently waiting for the expanded guidelines offered with HARP 2 to become available have found frustration. I’m being told that we are going to have the ability to originate HARP mortgages for my clients beyond 105% loan to value “soon” but as of the publishing of this post, I’m still limited to 105% LTV based on Fannie or Freddie’s estimated value of your home.  

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UPDATE 4/19/2012: Mortgage Master Service Corporation is adding several lenders who are allowing us to do unlimited loan to values! Stay tuned – I’ll have an exciting announcement soon!  

UPDATE 5/12/2012: WE’RE COOKING WITH GAS! WE NOW HAVE LENDERS WHO ALLOW EXPANDED LTVS WITH APPRAISAL WAIVERS FOR HARP 2.0.

Click here for your rate quote for your home located anywhere in Washington.

HARP 2 is the Home Affordable Refinance Program which is available to home owners who have their mortgage *securitized by Fannie Mae or Freddie Mac prior to June 1, 2009.  *NOTE: this is different than who you make your mortgage payment to (your mortgage servicer).

This program is intended to be a giant band-aid with our housing by allowing qualifed home owners to refinance their underwater mortgages, reducing their mortgage payment and/or term and hopefully stimulating the economy with the extra cash flow. Many are supposed to qualify without having an appraisal – it’s intended to be a streamlined process. It is streamlined and available…for some. For many it may feel like throwing spaghetti on the wall to see what sticks.

What are your odds of obtaining a HARP 2 refinance? It depends on what your scenario looks like. I’ve successfully closed many HARP 2 refinances without (and with) appraisals for both Freddie Mac and Fannie Mae securitized loans. Here’s what I can tell you now (remember, this is my opinion and subject to change…hopefully soon). This is not intended to discourage you from trying to obtain your HARP 2 refinance.

Your odds are strongly in your favor if your loan to value on your first mortgage is 105% or lower and if you do not have any private mortgage insurance. Zillow has seemed to be fairly accurate for estimating value. However the ultimate say on if the value is acceptable to create an “appraisal waiver” is Fannie Mae and Freddie Mac.

Your odds improve more if your mortgage is securitized by Fannie. Freddie seems to be a bit pickier with approvals and sensitve towards new debts or debt to income ratios. 

Second mortgages or HELOCs have not been a huge issue [knock on wood]. Most second lien holders have been cooperative and agreeing to subordinate their lien position – even without an appraisal.

Private mortgage insurance is still not where it needs to be with the HARP program. If you have any type of private mortgage insurance, this is an additonal “layer” to work with for your loan approval. The pmi company needs to agree to have the insurance transferred to the new loan and the new lender needs to accept the new pmi.  With pmi, your coverage amount will stay the same AND private mortgage insurance companies treat the transferred coverage as a “new loan” (you may be stuck with that pmi for a while on a new HARP loan).  Your odds are better with pmi if your loan to value is 95% or lower.

UPDATE 5/12/2012: HARP 2.0 mortgages with private mortgage insurance are not as much of an issue as long as the existing private mortgage insurance can be transferred or if the lpmi can be converted to borrower paid mortgage insurance. Most private mortgage insurance companies are agreeable and we work with lenders who are accepting transferred mortgage insurance. 

Odds are worse if your the company who holds your pmi is United Guarantee. UGIC is not cooperating as much as the other pmi companies. UGIC is participating in HARP, however they are not waiving the reps and warrants on the original file. Therefore they request and require the original package from the current mortgage servicer and it takes a lot longer than the other MI companies.

Current odds are [NOT] lower if you have LPMI (lender paid mortgage insurance). Your best bet may be to try your existing mortgage servicer to see if they can help you with your HARP 2 refi. It’s my understanding, some mortgage servicers are refusing to help their very own clients with this program.  Depending on the type of lender paid mortgage insurance (how the premium was structured) it may be fairly simple to help you with HARP 2.0.  Just like regular pmi, as long as the private mortgage insurance company allows it to be transferred and be “borrower paid” (some lpmi loans can be coverted to bpmi – borrower paid), we have lenders who will accept the pmi. YOU DO NOT HAVE TO GO BACK TO YOUR BANK OR MORTGAGE SERVICER WITH AN LPMI HARP 2.0 REFINANCE.

Again, I looking forward to sharing with you that I have unlimited LTVs and can help any Washington borrower who has pmi or lpmi but it’s just not the case “right now”. We are working on bringing on more lenders who may allow expanded guidelines that other banks seem to be restricting. Currently, I can help most borrowers who need a HARP 2 refi as long as the loan to value doesn’t exceed 105% per Fannie Mae or Freddie Mac’s estimated value of your Washington home.  UPDATE 5/12/2012: With the lenders we now work with, we have no loan to value restrictions for Fannie or Freddie and pmi or lpmi is probably not an issue. 

It’s very frustrating to see the overlays banks and mortgage servicers have put on the HARP 2. Banks are limiting the availability of a program that is designed to help stabilize housing and the economy. This needs to change. HARP needs to be widely available to all home owners who qualify. 

I’m happy to review your HARP 2 scenario for your home located any where in Washington. I have successfully helped many home owners refinance with the Home Affordable Refinance Program, including investment properties and second homes. 

If you would like me to provide a rate quote for your HARP 2 refinance, click here.

I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington…and yes, I would love to help you with your HARP (or any) refinance:

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:www.freddiemac.com/mymortgage orhttp://www.fanniemae.com/loanlookup/

Filed Under: HARP - Home Affordable Refi, Refinance Tagged With: , , ,

Refinancing when you have an existing Second Mortgage or HELOC

December 15, 2011 by 62 Comments

When you are refinancing your primary mortgage and you have an existing second mortgage or HELOC (home equity line of credit), the new lender will require to stay in “first lien position”. This boils down to who has first dibs on a property in the event of a foreclosure. Lien position is determined by the date the mortgage was recorded. When you refinance your first mortgage and you have an existing second mortgage, the new mortgage will have a recording date that is after the existing second mortgage. Technically, that would put the second mortgage or HELOC in “first lien” position, which would not be allowed with the new lender.  Click here for a no-hassle mortgage rate quote for your Washington state home. [Read more…]

Filed Under: HARP - Home Affordable Refi, Home Equity Loans & Second Mortgages, Refinance Tagged With: , , ,

Refinancing Your Seattle Area “High Balance” Mortgage Over $506,000

October 4, 2011 by Leave a Comment

If you obtained a high balance mortgage over the current limit ($506,000 in King, Pierce and Snohomish Counties) and missed the opportunity to refinance before the loan amounts were reduced, you may still have some options worth checking out. Especially with Fannie Mae hinting that loan limits may be reduced further in just a few months, effective January 1, 2012. FHA loan limits may be further reduced in 2012 as well. We typically learn what 2012 limits will be in November.  The gap between yesterday's higher loan limits and conforming/FHA loan limits may actually widen in a few months making most of these scenarios tougher to obtain in 2012.

Conventional Financing

Consider a Jumbo/Non-Conforming Mortgage. Fixed rates or adjustable rate mortgages may be worth your consideration depending on your financial plans. Non-conforming mortgages are for well qualified borrowers and require a minimum credit score of 720 and a maximum loan to value of 80%. Loan amounts of $506,001 and higher are now considered a jumbo in King County as well as Snohomish and Pierce.

Cash In Refinance. Not happy with how your investments are doing in the stock market? Some home owners are electing to use their savings or investments in to bring their principal balance down to the conforming loan limit.

Piggy Back Second Mortgage.  We currently are able to go up to 85% of the appraised value with a second mortgage.  The loan amounts can be structured to keep the first mortgage at 80% of the loan to value and/or at the county high balance conforming limit. Home owners need to be well qualified with credit scores of 720 or higher.  HELOCs and amortized fixed rates are available.

FHA Loans. If your existing mortgage is an FHA loan, you may be in luck. Although FHA loan limits were reduced on October 1, they are allowing streamline refinances of the former temporary higher loan limits.  UPDATE: FHA LOAN LIMITS FROM NOV 18, 2011 – DECEMBER 2012 ARE $567,500 IN KING, PIERCE AND SNOHOMISH COUNTY.

VA Mortgage Loans. Unlike conforming and FHA loans, VA elected to not reduce their loan limits (technically the guarantee) for the remainder of 2011.  

With mortgage rates at a historic lows, it may be worth your time to contact a licensed mortgage originator to review your options. Whether or not you should refinance depends on your personal goals and financial scenario.  If your home is located anywhere in Washington, I'm happy to provide you detailed written rate quotes with no obligation.

Filed Under: Fannie, Freddie and FHFA, FHA, Refinance, VA Mortgage Loans Tagged With: , , ,
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