HARP 2.0?


What is HARP? The short answer is this is not the musical instrument but rather it is an attempt by the US Government to breathe new life into the distressed US housing market by trying to revamp the Home Affordable Refinance Program.

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said FHFA Acting Director Edward J. DeMarco. “Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the Enterprises. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

DeMarco made it clear in this article that there would be no principal write-downs, simply the possibility of mortgage payment reductions for those that qualify for this special refinance.  It also maintains a choice President Obama made in the early days of his administration to focus on reducing monthly payments rather than on the amounts that borrowers owe, the latter being what a growing number of  both liberal and conservative economists consider necessary to bring resolution to the problem.

Why would any lender want to refinance an underwater mortgage and in particular one that is up to One Hundred and Fifty  percent upside down? Good question. One answer is that the lender gets to be forgiven for any earlier representations and warranties issued in conjunction with the initial mortgage loan. This is a free legal time out and a reduction in potential liabilities for the lender.  Another answer is to continue cash flow on a mortgage that may sooner default.

On October 28, 2011 it was reported in this article that each of the big four banks in the USA announced they would participate in HARP 2.0. When will this program be available? Possibly by the end of November, 2011, providing the FHFA has issued
the guidelines for the lenders to follow by then. As of this publication, the guidelines do not yet exist. Though the specific guidelines are not yet published, the general qualification guidelines were published in this document.

How To Qualify – One must have provable income. There must be a history of sufficient income as proven by the last two years of filed 1040’s. There also must be third party provable current year to date income sufficient to make the modified mortgage payment. Keep in mind this is applicable only to first mortgage loans, not second mortgages.  An upside is that one need not obtain an expensive appraisal as an Automated Valuation Model authorized by either Fannie Mae or Freddie Mac will suffice. Of course, appraisers will disagree with this determination by FHFA.

HARP 2.0 is available only for Fannie Mae and Freddie Mac owned mortgages. How do you know if your mortgage is owned by either of these mortgage giants?  Click here and follow the prompts to see if your mortgage is owned by Fannie Mae.  Click here and follow the prompts to see if your mortgage is owned by Freddie Mac.  Should the owner be one of these institutions, you may be able to get a lowered payment for the remainder term of your loan. Or you may reduce the remainder term of your loan if it makes sense to you to so do.

One need not use any of the big four banks as any mortgage loan originator may offer the HARP 2.0 program providing they have access to a lender that will underwrite these loans.

FNMA Update: October 1, 2014- Mod Rate Increases Get Underway.

This could be a great time to contact your HARP authorized lender.

Art Credit: Google Images

Financially Speaking – James Spray CCMB, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | November 1, 2011 | Rev. October 1, 2014
Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

13 comments on “HARP 2.0?

  1. James Spray says:

    Fox Business News reports that more than 1.8m homeowners will refinance under HARP2


  2. James Spray says:

    Fannie Mae Chief Risk Officer Comments on HARP II – Clear summary of the goals yet still lacking full detail for lenders to implement their systems yet for consumers and originators.



  3. James Spray says:

    Put back relief is a major driver for HARP 2 – hopefully it is not too little too late



  4. James Spray says:

    HARP 2 Guidelines –
    Fannie – http://www.usloans.com/fannieharp2.pdf
    Freddie -http://www.usloans.com/freddieharp2.pdf


  5. James Spray says:

    The National Association of Consumer Advocates has the following to say on HARP2 –


  6. James Spray says:

    From the National Association of Independent Housing Professionals:
    If you know of any investor willing to lend up to 125% LTV under HARP 2, RIGHT NOW, or in the near term, please post it on this site.

    Here’s what we know:
    1) The GSE’s won’t have their AU systems ready until mid March.
    2) HARP 2 began on Dec. 1st, but only seller/servicers are participating with manual underwriting. Third party originators are excluded until the AU systems are changed.
    3) Some investors will work with TPO’s with LTV’s up to 125%. (See above)

    It appears the GSE’s are giving the advantage to the banks, at least until March.


  7. James Spray says:

    Fannie/Freddie new and improved guidelines since the launch of the new and improved HARP 2. Still requires income qualification.


  8. James Spray says:

    Freddie Mac eliminated the minimum credit score requirement for borrowers seeking a mortgage refinance from their existing servicer, as long as they have at least 20% equity in their home, according to guidance released Thursday.


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