Home Affordable Refinance Program aka HARP 2 Guidelines

In November of 2011 the Obama administration announced a revamped Home Affordable Refinance Program or HARP for short. The initial HARP program was released in 2009 but limited an upside-down homeowner to a maximum loan to value of 125%. With so many homes more than 25% underwater, the program needed to be updated.

So here are the new rules (only applies to Fannie Mae and Freddie Mac loans):

- December 1^st, 2011 is first day applications may be taken. If you’re more than 125% loan to value you must wait until March 18th 2012 when Fannie Mae’s underwriting system is updated.

-No maximum loan to value; even if you’re 100% or more upside-down you may be able to refinance.

-Your current loan and new loan must be over 80% of your current home value. (If you owe equal to or less than 80% of your home value you can refinance under the standard refinance rules)

-Fannie Mae and Freddie Mac are reducing and/or eliminating some risk based fees making the rates better. Under the original HARP there were risk based adjustments that could add up to 3 points to the rate.

-Your current loan must have been sold to Fannie/Freddie on or before May 31^st 2009.

-The income and asset requirements are minimal and most options only require a recent pay stub and verification of employment. While there is no debt to income limit if your payments don't increase by more than 20%, you must receive an approve/eligible decision when running the loan through Fannie's Desktop Underwriter (DU).

-If you have a 2^nd mortgage you can’t combine the 2^nd into a new loan. Your existing 2^nd mortgage will have to agree to subordinate behind the new HARP 1^st mortgage.

-If you have existing mortgage insurance your current mortgage insurance company will have to agree to switch over the coverage to the new loan. This is completely voluntary on their part so there are no guarantees.

-Eligible properties include one- to four-unit primary residences, second homes, and one- to four-unit investment properties, including single-family homes, condos, co-ops and manufactured housing.

-Maximum loan to value is 105% on 40 year and adjustable rate loans.

What will make you ineligible for a HARP 2 refinance?

-Can’t have late payments in last 6 months and not more than one 30 day late in the last 12. Any 60 day+ late payment disqualifies you.

-If you’ve refinanced under the HARP 1 program you’re ineligible.

-If your current loan is not owned by Fannie Mae or Freddie Mac. (Click this link to find out if FREDDIE MAC owns your loan, click this one to find out if FANNIE MAE owns your loan)

This updated program may be able to help thousands of Sonoma County, Marin County, and Napa County home owners to stay in their homes as well as save them thousands in interest.

For more details on the HARP 2 program here are the press releases for FANNIE MAE and FREDDIE MAC.

If you're in California and want to refinance under this program call or e-mail us today!