Does anyone else feel like banging their head against a wall? Is HARP just a smokescreen?

sleepinlizard

LoanSafe Member
Aug 31, 2012
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My husband and I have been trying to apply for HARP for almost a year. On the outside, we meet all of the pre-qualifiers. Yet, when we reach the underwriting phase, Fannie Mae rejects it. We have heard several different possible reasons from lenders, but the consensus seems to be certain "credit enhancements' were made on the loan. Trying to find out what those "credit enhancements" were was no easy feat. What I could determine was that there is a MI certificate on the loan, as well as default insurance with Lehman Brothers (who aren't around anymore). We do not pay a PMI on our loan, so they are assuming that it was a LPMI. Our servicer, Seterus, has no documentation to support either insurance on the loan. However, this is hindering us from moving forward. The only advice that anyone, including Fannie Mae mortgage help center in Philly (which, by the way, are useless), could offer was to contact the servicer and get the terms of the loan modified. After speaking with Seterus, I realized that this is going to be more of the same. We would likely be denied for a modification because we are current with our mortgage payments. We need to make some changes soon with our current mortgage. I have not been able to work as a result of an injury, so our income has been greatly reduced. My husband makes a decent salary, but it has not been easy. I feel like we are being punished for an obvious bad loan on a house that we absolutely love. We are confused, frustrated and nervous. And if anyone has any advice on this situation, we would greatly appreciate it.
 

Evan Bedard

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Loan Safe Mortgage
Aug 26, 2007
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However, this is hindering us from moving forward. The only advice that anyone, including Fannie Mae mortgage help center in Philly (which, by the way, are useless), could offer was to contact the servicer and get the terms of the loan modified. After speaking with Seterus, I realized that this is going to be more of the same. We would likely be denied for a modification because we are current with our mortgage payments. We need to make some changes soon with our current mortgage. I have not been able to work as a result of an injury, so our income has been greatly reduced. My husband makes a decent salary, but it has not been easy. I feel like we are being punished for an obvious bad loan on a house that we absolutely love. We are confused, frustrated and nervous. And if anyone has any advice on this situation, we would greatly appreciate it.
Welcome back to the community.

There's a huge discussion on this subject in the following thread, I believe it'll help answer some of your questions:

http://www.loansafe.org/forum/refinance/47390-denied-fannie-mae-du-reason-credit-enhancements-any-help-here-3.html
 

Erik Sandstrom

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Jan 14, 2011
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Hi Sleepinlizard,
I know very well what you're dealing with as it's been a prevalent issue with many people trying to qualify for HARP. I have had many borrowers contact me stating they have a credit enhancement on their file, actually the majority with Seterus. The ones with Seterus in most cases have actually been approved through automated underwriting rather than receiving the "Ineligible" feedback. However there are a select few borrowers that truly do have a credit enhancement which could mean many different things. It could mean that you have LPMI on your file that was applied after the loan was acquired by Fannie/Freddie and the reason they applied LPMI on the loan was to protect their interests in case of foreclosure. As long as there is no increase in premium you as the borrower do not have to be notified this was applied to your loan.

In cases like these you have to work directly with the servicer (Seterus) to update the records with Fannie Mae with the certificate number, coverage amount and who the MI provider is. Fannie Mae has informed me that every servicer has a Fannie Mae representative they work directly with to take care of situations like these. Sometimes it takes an overwhelming amount of effort just for them to do this task and sometimes next to impossible. This is why most lenders will just deny you right off the bat and move on to the next client because they are either not familiar with the credit enhancement or don't know of any way to cure it.

There could also be other reasons for the credit enhancement, it may not be detecting your loan as a Fannie Mae/Freddie Mac loan that is eligible for the DU Refi Plus (HARP) even though you meet the acquisition date requirement, DTI, Credit...etc. Again this would need to be updated with Fannie.

Now let's assume that Seterus updates the records with Fannie, It seems in most cases even when they say they DO update the system you still receive the same feedback from the automated system. This leads me to believe that you would have to wait for an update with the Automated System (DU Version 9.4...etc) to become eligible. At this stage you're going to need to find a lender/loan officer that's willing to work with you and the servicer. You might also need to push alongside the lender calling in yourself to Seterus to see if any progress has been made. I wouldn't mind taking a look at the scenario however I wouldn't want to promise anything. If you can obtain a copy of the automated underwriting results from a previous loan officer you were working with that would help me even more to determine what the root cause of the problem is.