Product Revisions to HARP Refinance Guidelines

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,094
174
63
San Diego, California
www.loansreduced.com
DU Refinance Plus and Freddie Open Access (HARP)

FNMA and FHLMC have announced that loan limits have remained unchanged for 2013.

Cash Reserve Section: Information has been added to clarify what defines a large deposit. Large deposits are defined as a single deposit that exceeds 25 percent of the total monthly qualifying income for the loan. This is a great update as prior to this we have had to explain any deposit exceeding $25.00 which has caused grief on the borrowers side, loan officer and underwriter.

Credit Section: New requirements for loans that exceed 125% LTV state that the borrowers mortgage history must be 0x30 day late for the past 24 months. No missed payments for 24 months.

Employment Tax Validation Section: Information has been added regarding taxpayer theft and borrowers not required to file tax returns.

Hardest Hit Fund Section: Arizona has added information regarding eligibility. These changes can be viewed at www.azhousing.gov

Note: Nevada has run out of funds to continue this program

Debt Ratio Section: In order to maintain the credit quality of our servicing portfolio for the HARP Refinance, we have implemented overlays to the maximum Debt-to-Income (DTI) allowed.

The Revisions are as follows:

  1. Primary Residence: 55%
  2. Second Home: 50%
  3. Investment Property USING subject rental income to qualify: 45%
  4. Investment Property NOT Using subject rental income to qualify: 50%

Verbal Verification of Employment Section: Information has been revised regarding the requirements surrounding self-employed borrowers.

The borrower’s business must be verified by a third party, such as a CPA, regulatory agency or the applicable licensing bureau if possible. The borrower’s business may also be verified via a phone listing and address for the business using a telephone book, the internet or directory assistance

If you have any questions regarding these revised guidelines, please feel free to reach out. Many borrowers have contacted me asking “Why does this bank (CITI, BofA, Wells Fargo) have these strange restrictions on the HARP loans when Fannie Mae isn’t requiring them.” – Fannie Mae has published the guidelines for the “Same Servicer” program which have more lenient guidelines and is more streamlined however usually subject to a higher interest rate. Some borrowers only have this as an option due to credit problems in the past.

The reason every lender has their own restrictions is due to a few factors:


  1. The delivery restrictions Fannie & Freddie have put on the lender
  2. The originating lender wants to keep a good status with Fannie Mae and Freddie Mac and by delivering them better loans on the secondary market it keeps their coupon (base price) lower which allows the lender to pass on the better cost to their prospective clients.

Even though Fannie Mae has their own published guidelines, each and every lender seems to have their own restrictions – including us. We have been and will remain one of the most competitive lenders offering the HARP Program with Unlimited LTV. If you would like to find out if you qualify, please reach out to myself directly either at: [email protected] or 619-379-8999.
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,094
174
63
San Diego, California
www.loansreduced.com
HARP 2.0 New Updates – Release Date November 16, 2013

There are new updates coming for the HARP program on the weekend of November 16[SUP]th[/SUP], 2013 which will include changes that may affect your eligibility. Listed below are a few changes to take into consideration:

EA-1, EA-2 & EA-3 recommendation levels will no longer be returned for HARP/DU Refi Plus loan case files meaning the number of loans that will receive an approval will be expanded.

Higher-Priced Mortgage Loans (HPML) – If a lender determines that you have not passed the HPML test, the lender must manually confirm that the loan case file has a representative credit score of 620 or more and a debt-to-income ratio of 45% of less in order for the loan to be eligible for delivery to Fannie Mae.

Derogatory Credit – The standard waiting period and re-establishment of credit criteria following a bankruptcy, foreclosure, deed-in-lieu of foreclosure, or pre-foreclosure sale is being removed for HARP/DU Refi Plus case files. DU will issue a message on these case files letting the lender know that DU did identify the event and that the loan case file would be eligible for delivery to Fannie Mae, regardless of when the event occurred.

DU Estimated Value – The messages issued on case files that specifies the estimated value of the property used by DU to determine eligibility for the fieldwork waiver (appraisal waiver) will no longer be issued on the DU Version 9.1. This change will decrease the number of property valuations that lenders are required to provide to their borrowers under the new regulation and will help minimize borrower confusion by reducing the possibility of multiple and sometimes inconsistent values being reported to the borrower on the same property. However this change does not mean the number of loan case files eligible for the fieldwork waiver will increase.

Foreclosure Coding Incorrect – When DU identifies a foreclosure on a credit report that appears to be one that was subject to a deed-in-lieu or pre-foreclosure sale (short sale), the lender may instruct DU to disregard the foreclosure information on the credit report by entering a code in the explanation field. This has been an ongoing problem where the coding for foreclosure was incorrect and some lenders/brokers have been unable to get past this as they need an approval from automated underwriting. With this update the problem should be fixed and allow the lenders/brokers to manually input that the loan was a short sale or deed-in-lieu. I personally haven’t had any problems with this in the past as we are a direct Fannie/Freddie & Ginnie seller meaning that we’re able to manually underwrite files and provide proof of the incorrect coding.