HARP Most Commonly Asked Questions - Answered!

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
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San Diego, California
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HARP Most Commonly Asked Questions – Answered!
As you may know, I am one of the few HARP experts in the industry today and one of the main reasons I’m on this forum is to help educate homeowners of the options they have. I am a licensed California loan officer offering the program with unlimited LTV, loans with Mortgage Insurance and most of the time providing property inspection waivers (appraisal waivers).

What I’ve experienced recently as far as statistics:

Freddie Mac HARP through Loan Prospector (Open Access)

15 – 20% of clients get denied through Loan Prospector for various reasons. My statistics may be lower than normal as I know a few tricks to get past the Caution feedback.
95% of Freddie Mac clients receive appraisal waivers

Fannie Mae HARP through Desktop Underwriting

10 – 15% of clients get denied through Desktop Underwriter
75% of Fannie Mae clients receive appraisal waivers as long as the value submitted is realistic compared to the comparable sales in the area.

Questions & Answers

Do I have to go through my current lender/servicer?


Absolutely not! This is one of the biggest misconceptions with the program, many of the current servicers (ie: Bank of America, Citi, Wells Fargo) are all telling their clients that they must go through them for HARP. This is another tactic used by them to make the borrower believe they have no other options and gouge them with interest rates. Many banks have been quoting rates for HARP that are above market rates. The HARP program is NOT a loan modification, nor is it a negotiation with your lender.

Does this loan include closing costs?


Yes, a HARP transaction is similar to a conventional refinance which will include origination, underwriting, processing, title, escrow, pre-paid taxes, insurance and per-diem interest. Different lenders will offer different rates and closing costs, make sure you work with the company that you feel most comfortable with and who can benefit you most.

Do I need an Appraisal?

In most cases NO, I’ve seen about 10-15% of my current clients needing an appraisal. The system has an automated valuation model built into the program which will determine the value of the home based on comparable sales and if the system is confident that you have submitted an accurate value it will not require an appraisal.

I had a property go into short sale, when can I get HARP?


There is a 4 year seasoning requirement for short sales, your credit must have been repaired in that time as well as no mortgage late payments in the past 12 months.

One of my properties was foreclosed on, when can I get finance


Seven years must have passed from the completion date of the foreclosure. If the foreclosure was a deed-in-lieu of foreclosure the minimum time period is 2 years to re-establish credit under extenuating circumstances but in most cases 4 years.

I’ve filed bankruptcy, how soon am I able to get refinanced under HARP?


Four years must have passed and credit must have been re-established from the discharge date or a 4 year period from the dismissal date. Under extenuating circumstances you may be able to get approved after 2 years, no exceptions under 2 years.

I’ve received a loan modification in the past, am I eligible?


If you’ve received a loan modification on the property you’re trying to refinance under HARP you are NEVER eligible for the program under open access. This may be different with the same servicer guidelines. I have confirmed this through underwriting. They treat a loan modification similar to a short payoff or restructured debt (settled second mortgage, reduction in principal…etc)

Is there a pre-payment penalty on the loan?


No, you can pay the loan off in 5 years, there is no pre-payment penalty on these loans.

Does HARP include a Principal Reduction?


No, A Principal reduction is only able to be obtained through a loan modification.

Can I consolidate both my 1st and 2nd mortgage?

N
o, consolidation of a 1sT and 2ND would be considered a cash out refinance and this transaction is not eligible for underwater borrowers under HARP. The 2nd mortgage will have to be subordinated (agree to stay second position.) To this day, I have not yet had one company give me a hard time with the subordination. If they don’t agree to stay second position they are adding additional risk of foreclosure on the property.

Can I pull cash out to make upgrades?


NO, Cash out transactions are NOT allowed, the max cash back is $250.00

Why is Fannie Mae/Freddie Mac telling me I can’t refinance because of “Credit Enhancements”?


This is a very hot topic and includes loans with Lender Paid Mortgage Insurance. Existing loans that are subject to recourse and/or indemnifications agreements, and the coverage was necessary to meet Fannie Mae minimum credit enhancement requirements applicable to loans with LTVs in excess of 80% remain ineligible for Refi Plus (DU or manual). In most cases the LPMI was added after the loan was funded, this is what is creating the “Credit Enhancement” road block many people are running into. You would want to discuss your potential options with Fannie Mae or your current lender.

I’ve received expanded approval feedback from Fannie Mae, is there anything I can do?
T
here are certain things that can be done to overcome the expanded approval feedback, at this time I’d like to keep that information proprietary. However if you’re trying to be approved after receiving Expanded approval feedback, shoot me an e-mail and I can give you some advice.

How much cash reserves do I need to qualify?


For an owner occupied home you will need to show 2 months of reserves in liquid assets. For non-owner occupied residences you must show 6 months of reserves.

Is there anything that helps my application be approved?


Yes, here’s what I’ve seen help: Positive net worth, high income, good credit history and scores, reducing the term of the loan, paying closing costs out of pocket, ASSETS (401K, Stocks, Bonds, Money Market, IRA, CalPERS, CalSTERS…etc)

Can I add a co-borrower to the loan?


Yes, one of the borrowers on the old loan must remain on the new loan.

Can I remove a borrower from the loan?


Yes, you must provide evidence that the remaining borrower has made the mortgage payments out of their own funds for the past 12 months. The remaining borrower will also still have to qualify.

Do Property Taxes & Insurance HAVE to be impounded?


Under most circumstances – Yes. There are exceptions to this rule: If your current LTV is less than 90% and your loan did NOT have impounds you can keep them separate. ANY loan-to-value above 90% will require impounds.

Can I refinance an Investment Property or Second Home under HARP?


Yes, Investment properties and second homes are eligible under HARP.

Does HARP require Mortgage Insurance?


No, the only time HARP would require mortgage insurance is when the loan being refinanced currently has MI. If your loan has MI now, the same coverage will be transferred to the new loan. If you paid MI in a single premium you will not have an additional payment on the new HARP refinance for MI because you’ve already paid it in full.

If you have LPMI (Lender Paid Mortgage Insurance) at many times the MI was built into the interest rate you’re paying now, that will change to a monthly premium rather than through the interest rate.

Is there a maximum number of properties I can have financed?


Freddie Mac – Yes, you cannot have more than 4 properties financed.

Fannie Mae – If the subject property is owner occupied, there is no limit to the number of properties that a borrower may own or have financed. If the property is an investment home the maximum number of properties may own or be obligated on is 4. There is an exception to the rule, as long as you enter into a fixed rate product via the HARP program you can have more than 4 properties financed. Ultimately Fannie Mae DOES have a multiple property program available. Under this program you must have 6 months of reserves on EVERY property you own.

If you have any further questions, please don't hesitate to contact me on my information below.

I'm here to help!
 
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Heide

LoanSafe Member
May 10, 2012
21
0
0


  1. Can I consolidate both my 1[SUP]st[/SUP] and 2[SUP]nd[/SUP] mortgage?
    1. No, consolidation of a 1[SUP]st[/SUP] and 2[SUP]nd[/SUP] would be considered a cash out refinance and this transaction is not eligible for underwater borrowers under HARP. The 2[SUP]nd[/SUP] mortgage will have to be subordinated (agree to stay second position.) To this day, I have not yet had one company give me a hard time with the subordination. If they don’t agree to stay second position they are adding additional risk of foreclosure on the property.
I've spoken with dozens of professionals in all facets of the industry (govt and private) and no one can even begin to understand why PNC is denying our subordination on our HARP2 refi (http://www.loansafe.org/forum/harp-mortgage-loan-program/48291-harp2-approved-2nd-pnc-denying-subordination.html#post403653) ... It has me so incredibly frustrated, I can't even begin to explain it.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
I havent had any issues with subordinations, if they don't agree to subordinate they are adding additional risk to foreclosure. Not sure what your lender is being told but that doesn't sound right.
 

exploringoptions

LoanSafe Member
Jul 15, 2012
14
0
0
Hi Erik,
I have a few detailed question about HARP2.0 and CatDomiano pointed me to you.

Background:
I am close to closing with with my original lender (Citi service/Freddie owened), but the lender keeps adding fees and changing the discount for the rate I locked and just plain not communicating, so I'm considering starting over with the open access route - they have better rates anyhow! However, time is important too and I don't want to start over with another lender and find out it won't actually go through and have to start all over again with Citi (who tells me I have to wait 30 days before reapplying if I walk away from this loan).

1)My concern on open access comes from Freddie Mac's Relief Refinance Mortgages-Open Access sheet that states:
if the mortgage being refinanced has recourse, indemnification, or other enhancements defined in Guide Chapter B24, it is ineligible to get refinanced as a Relief Refinance Mortgage-open access.
Loan is Citi serviced/Freddie owned. It is not my original loan, I refi'd in 2008 to combine my 1st and 2nd into one loan (no cash out), but I assume that makes it a recourse loan. Tried reading the guide, but it was clear as mud to me! Does recourse mean the same thing in this context, am I ineligible of open access?

2) Refinancing for me keeps my options open...but doesn't preclude that I may decide to short sale in the future. My hardship isn't financial, but job relocation/medical. A local realtor told me that if I refinance, I will probably have a hard time if I need to short sale in the future. Do you know if there is any truth to that? Is there anything in the underwriting/note/deed of trust that is different from any other refi? She also mentioned that the new origination date being later than 2009 could be a problem.

My lock expires this week, so I appreciate any info you can add. I looked for your direct contact info and thought I saw it initially, but appears to not be there any longer...?
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi Erik,
I have a few detailed question about HARP2.0 and CatDomiano pointed me to you.

Background:
I am close to closing with with my original lender (Citi service/Freddie owened), but the lender keeps adding fees and changing the discount for the rate I locked and just plain not communicating, so I'm considering starting over with the open access route - they have better rates anyhow! However, time is important too and I don't want to start over with another lender and find out it won't actually go through and have to start all over again with Citi (who tells me I have to wait 30 days before reapplying if I walk away from this loan).

1)My concern on open access comes from Freddie Mac's Relief Refinance Mortgages-Open Access sheet that states:
if the mortgage being refinanced has recourse, indemnification, or other enhancements defined in Guide Chapter B24, it is ineligible to get refinanced as a Relief Refinance Mortgage-open access.
Loan is Citi serviced/Freddie owned. It is not my original loan, I refi'd in 2008 to combine my 1st and 2nd into one loan (no cash out), but I assume that makes it a recourse loan. Tried reading the guide, but it was clear as mud to me! Does recourse mean the same thing in this context, am I ineligible of open access?

2) Refinancing for me keeps my options open...but doesn't preclude that I may decide to short sale in the future. My hardship isn't financial, but job relocation/medical. A local realtor told me that if I refinance, I will probably have a hard time if I need to short sale in the future. Do you know if there is any truth to that? Is there anything in the underwriting/note/deed of trust that is different from any other refi? She also mentioned that the new origination date being later than 2009 could be a problem.

My lock expires this week, so I appreciate any info you can add. I looked for your direct contact info and thought I saw it initially, but appears to not be there any longer...?
Hi ExploringOptions,
Thank you for reaching out to me! Feel free to contact me also by e-mail as that is monitored very heavily.

Sorry to hear about the run around you've been getting by Citi, if they're quoting you one thing and changing it multiple times that could be a red flag you might want to watch out for. Dealing with a lender like myself you will never have any communication problems and I am very up front and honest with my business practices.

You will not have to wait 30 days to start the process with a new lender however with Citi you may just have to. I can find out if you're eligible in no time (if you're within a state I am licensed in), that will be the first and largest hurdle to overcome with the HARP program. From there it is just proving the information we have provided with the automated underwriting. I wouldn't worry too much about the open access credit enhancement issues at this time if you have never applied, I would be honored to take a look at the scenario and find out if it will work!

Shoot me off an e-mail, right now they are being monitored by my assistant Rosemary who is AMAZING at what she does, is a licensed loan officer and I have trained her very well. If you're not in one of the states we can help I usually will have a direction to point you in.

At this point, time is of the essence and please mention I've said that when you call or email. I will be back in the office next week after I recover from some extremely major surgeries I've been through over the past weeks, thank you all for your patience and I'm looking forward to being back!
 

exploringoptions

LoanSafe Member
Jul 15, 2012
14
0
0
2) Refinancing for me keeps my options open...but doesn't preclude that I may decide to short sale in the future. My hardship isn't financial, but job relocation/medical. A local realtor told me that if I refinance, I will probably have a hard time if I need to short sale in the future. Do you know if there is any truth to that? Is there anything in the underwriting/note/deed of trust that is different from any other refi? She also mentioned that the new origination date being later than 2009 could be a problem.
Thanks Erik!

Hope you are recovering well!!

I spoke with Rosemary minutes ago. She thinks for part 1 of my post above that I am ok. She says that she's processed HARP loans that were already refinanced at least once. She did ask that I reply to you about part 2 of my question quoted above because she didn't have experience in that area. Very sorry to bother you while you are recovering, but as you said "time is of the essence".
 

markedup

LoanSafe Member
Jul 30, 2012
4
1
0
Why is it that Fannie Mae doesn't require a credit score, but lenders can make up their own rules and set their own minimum credit scores? I'm getting extremely frustrated because none of them so far, will disclose this requirement until after I have been quoted rates and payments, told that I would qualify, sent in all the required documents and gotten my hopes up. Is there any lender out there who actually follows the Fannie Mae guidelines?
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi MarkedUp,
I wanted to respond to your post, hopefully answer your question and resolve some of the frustrations you're going through. The HARP/DU Refi Plus program has 2 different types. One is called the "Same Servicer" and the other is "Open Access" - the Same Servicer usually follows the Fannie Mae Guidelines and has less requirements behind the program. Any lender outside of your own will have to go through what's called "Open Access" which is more of a conventional loan procedure which requires proof of income, credit score requirements...etc.

Hopefully by now you've received help but the reason the other lenders have these requirements is because it's a very risky product to offer. The lender is taking on a loan which may be extremely underwater. If they underwrite that loan wrong and the borrower falls into default it could cause the lender to "Buy Back" the loan and that can potentially hurt them especially if they are doing over 200+ million a month of HARP transactions. This is why most are very cautios and have overlays built in which prevent the loans from moving forward.

Our minimum FICO requirement for HARP is 620, which is extremely low! If you're still in need of help let me know, the post you made was right after I was in a major motorcycle accident so you may already be working with someone. Either way I do hope it works out the best for you and your family.

Interest rates once again hit all time lows this past week, it couldn't be a better time to refinance. My contact information is below if you have any questions. Our typical turn time for these loans is averaging about 30 days!
 
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markedup

LoanSafe Member
Jul 30, 2012
4
1
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Thank you for the reply, sorry to hear about your accident. I still have not received any assistance, my current lender, SunTrust, has been nothing but uncooperative, so much that I have just given up. My credit score has taken a hit because of it and I am basically treated like I'm worthless from other lenders because my score isn't perfect, despite never being late on a mortgage payment, ever. It seems like foreclosure is the only option and I'm beginning to realize that banks and mortgage companies would rather take someone's home then help them stay in it.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Do you know what your credit score is? Sorry to hear about that, you should never be treated that way. You're the one knocking on their door asking for business, you should be treated with utmost respect.
 
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markedup

LoanSafe Member
Jul 30, 2012
4
1
0
Do you know what your credit score is? Sorry to hear about that, you should never be treated that way. You're the one knocking on their door asking for business, you should be treated with utmost respect.
Thank you. It's around the 580's now, it was in the mid 600's when I first tried to get some help but didn't seem to make much difference. I'm doing everything i can now to try and get my score up. One question i have is what score do lenders look at? I have gotten mine through the consumer sites, but have been told lenders don't look at those, so what's accurate?
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Thank you. It's around the 580's now, it was in the mid 600's when I first tried to get some help but didn't seem to make much difference. I'm doing everything i can now to try and get my score up. One question i have is what score do lenders look at? I have gotten mine through the consumer sites, but have been told lenders don't look at those, so what's accurate?
You're getting very close!!! I would recommend paying any unsecured liabilities down at least under 1/2 of the available balance. That or paying off liabilities completely can help you increase your score. Try not to close out any accounts you have, keep them open...the more seasoned they are the better it improves your score.

Regarding the different scoring systems, you're correct. There is a different scoring system when you pull it through a consumer site, auto finance or home finance. The only way to find out would be through a mortgage scoring system. Try not to pull your credit so many times, that also affects your score.
 
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Sbarnum

LoanSafe Member
Nov 18, 2012
1
1
0
74
I was told since my mortgage rate has readjusted to 3.25 I won't qualify for a HARP refinance. Is this true. My present adjustable rate mortgage is for $416,000 and the property value is between $435,000 and $500,000. My credit is excellent above 800. What are my options. I don't qualify for a traditional refinance since my LTV rate is above 80%
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi Sbarnum,
It's not true that you wouldn't qualify for a HARP refinance just because you have an adjustable rate. You must show a benefit through the HARP program and that would be switching you from an ARM to a Fixed rate.
 
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dvanwey

LoanSafe Member
Dec 13, 2013
6
1
1
Thank for the post. I'm new to the forum and I have some quick questions.

We inquired about HARP when it first came on the scene. We were told because we have a CalHFA loan (loan is owned by the state of California) we are ineligible for refinancing via HARP. We were told this by CalHFA and another individual in the mortgage industry (locally).

Unfortunately, we have fallen behind (1 month) on our loan and have exhausted all of our savings trying to continue making payments on the property. The property is severely underwater, so much so that even Keep Your Home California will not help us. We have been denied 3 times by CalHFA for mortgage assistance and are seriously considering short-selling the home at this time.

My questions is can a CalHFA be refinance to a lower interest rate via the HARP program?

Thank you.
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi Dvanwey,
Thanks for the praise, it's much appreciated. I truly enjoy helping homeowners and that's why I'm a part of LoanSafe.

With you being denied the HARP program because you have CalHFA there's a couple questions that I would like to ask.

1. Is your loan backed by Fannie Mae or Freddie Mac? If your loan is backed by Fannie/Freddie and was acquired before the acquisition date requirement there is a lender that can help. I would be willing to give you that information, please reach out to me via e-mail.

2. If your loan is not backed by Fannie or Freddie you wouldn't be eligible for HARP at this time and would need an equitable position in your home in order to refinance.
 
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brownruth

LoanSafe Member
Jan 2, 2010
11
1
1
Hello,

I received a loan modification in 2010. It started in 2009 and took nearly a year to complete, plus on 1 occasion I was asked to give them
$1500 to qualify. That didn't make much since to me because I was about to loose my home. But I scraped the money together from family
because I was desperate.

I didn't quality for the HAMP program and was never given a reason why until a nice women here on the forum, called Citi with me on a three way call. If I understood them correctly is was because the house was not backed by Fannie or Freddie.

Once the process started I made timely payments. I was told that I would have a fixed rate, but after receiving the paper work to sign, I realized it was an adjustable rate. My mortgage was at a 10% rate. It started out at 2%. So now it goes us 1% each year. It's to a point now where I can barely afford the payment.

I then called Citi to let them know that was not what I was told by the guy I was working with. They then said that's the way it is...take it
or leave it....there was nothing they could do to change it. So out of desperation I took it.

I tried to go for the HARP program a couple of months ago, but was told since my house was not backed by Fannie or Freddie I was not eligible. I was told that I needed equity in my home. Well, since most people are upside down, how on earth is it possible to even have any equity.

Is there any help out there for people like me? There has got to be something that can be done?

Thanks in advance!
Ruth
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,099
181
63
San Diego, California
www.loansreduced.com
Hi Ruth,
Thank you for reaching out to us here at LoanSafe, we appreciate you sharing your story as many others are in the same position. The HARP program does require that your loan is backed by Fannie Mae or Freddie Mac to confirm your question. They were working on legislation to pass a program for borrowers that owe more than the home is worth but are NOT backed by Fannie & Freddie however it seems to have been stalled for quite some time. The program is called HARP 3.0, but again it hasn't been released yet and we don't know if it ever will be.

President Obama specifically stated that "Every responsible homeowner in America should be given the opportunity to refinance". However to this day we still don't have a program outside of loan modification that can help someone that is not backed by Fannie or Freddie.

If I were you, I would go back and check your original modification documents. Typically there is an increase in rate after 5 years and then it should cap out at a certain percentage rate (for most modifications) that is usually somewhere around 4.5%. In addition to that you may want to re-apply for a loan modification if the payment isn't affordable to you now.

If you would like to be added to my HARP 3.0 mailing list please feel free to shoot me an e-mail at [email protected] and I can keep you updated with any progress of the program.
 
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nbtapia1

LoanSafe Member
Jun 3, 2009
165
5
18
USA
Hi Ruth,
Thank you for reaching out to us here at LoanSafe, we appreciate you sharing your story as many others are in the same position. The HARP program does require that your loan is backed by Fannie Mae or Freddie Mac to confirm your question. They were working on legislation to pass a program for borrowers that owe more than the home is worth but are NOT backed by Fannie & Freddie however it seems to have been stalled for quite some time. The program is called HARP 3.0, but again it hasn't been released yet and we don't know if it ever will be.

President Obama specifically stated that "Every responsible homeowner in America should be given the opportunity to refinance". However to this day we still don't have a program outside of loan modification that can help someone that is not backed by Fannie or Freddie.

If I were you, I would go back and check your original modification documents. Typically there is an increase in rate after 5 years and then it should cap out at a certain percentage rate (for most modifications) that is usually somewhere around 4.5%. In addition to that you may want to re-apply for a loan modification if the payment isn't affordable to you now.

If you would like to be added to my HARP 3.0 mailing list please feel free to shoot me an e-mail at [email protected] and I can keep you updated with any progress of the program.

Hi Erick, I’ve received an in house a loan modification in 04/2013 am I eligible to apply/Refinance HARP?
Please help..
 
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