If you’re underwater on your conforming, conventional mortgage, you may be eligible to refinance without paying down principal and without having to pay mortgage insurance.
Here are the details of the government’s new 2012 HARP refinance program.
What Is HARP?
HARP was started in April 2009. It goes by several names. The government calls it HARP, as in Home Affordable Refinance Program.
The program is also known as the Making Home Affordable plan, the Obama Refi plan, DU Refi +, and Relief Refinance.
In order to be eligible for the HARP refinance program :
- Your loan must be backed by Fannie Mae or Freddie Mac.
- Your current mortgage must have a securitization date prior to June 1, 2009
If you meet these two criteria, you may be HARP-eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-eligible.
HARP : Questions and Answers
Do these question-and-answers account for the “new” HARP mortgage program?
Yes, everything you are reading is accurate as of today, April 13, 2012. This post includes the latest changes as rolled out by the Federal Home Finance Agency on October 24, 2011, and as confirmed by Fannie Mae and Freddie Mac on November 15, 2011. HARP 2.0 was formally released by Fannie Mae and Freddie Mac March 17, 2012.
Is “HARP” the same thing as the government’s “Making Home Affordable” program?
Yes, the names HARP and Making Home Affordable are interchangeable.
How do I know if Fannie Mae or Freddie Mac has my mortgage?
Fannie Mae and Freddie Mac have “lookup” forms on their respective websites. Check Fannie Mae’s first because Fannie Mae’s market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.
If my mortgage is held by Fannie Mae or Freddie Mac, am I instantly-eligible for the Home Affordable Refinance Program?
No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.
My mortgage is held by Fannie/Freddie. Now what do I do?
Find a recent mortgage statement and write “Fannie Mae” or “Freddie Mac” on it — whichever group backs your home loan — so you don’t forget. Give that information to your lender when you apply for your HARP refinance.
My mortgage is backed by Wells Fargo. Am I eligible for HARP?
It’s possible that your mortgage is backed by Wells Fargo, but the more likely answer is that Wells Fargo is just your mortgage servicer; the bank that collects your payments. Wells Fargo backs very few of its own loans. Most loans for which payments are sent to Wells Fargo are backed by either Fannie Mae or Freddie Mac. Double-check with Fannie Mae and Freddie Mac before assuming Wells Fargo backs your loan.
My mortgage is backed by Bank of America. Am I eligible for HARP?
Bank of America does back some of its own loans, but the more likely answer is that Bank of America is your mortgage servicer; the bank that collects your monthly mortgage payments. Bank of America backs very few of its own loans. For most loans for which payments are sent to Bank of America, Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae and Freddie Mac to make sure Bank of America doesn’t hold your loan.
My mortgage is backed by Chase. Am I eligible for HARP?
There is a chance that Chase backs your loan, but what’s more likely is that Chase is just your mortgage servicer; the bank that collects your payments each month. Chase backs very few of its own loans. For most loans for which payments are sent to Chase, you’ll find that Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae’s and Freddie Mac’s websites to make sure your loan is not held by Chase.
What if neither Fannie Mae nor Freddie Mac has a record of my mortgage?
If neither Fannie nor Freddie has record of your mortgage, your loan is not HARP-eligible. However, you may still be eligible for a “regular” refinance to lower rates. Or, if your mortgage is insured by the FHA, use the FHA Streamline Refinance program. The FHA Streamline Refinance helps underwater homeowners, too.
Does HARP work the same with Fannie Mae as with Freddie Mac?
Yes, for the most part, the HARP mortgage program is the same with Fannie Mae as with Freddie Mac. There are some small differences, but they affect just a tiny, tiny portion of the general population. For everyone else, the guidelines work the same.
Am I eligible for the Home Affordable Refinance Program if I’m behind on my mortgage?
No. You must be current on your mortgage to refinance via HARP.
I’ve been told by my bank that I’m not eligible for HARP. I think my bank is wrong. Can I get a second opinion?
If you’ve been turned down for HARP but believe that you’re eligible, apply with a different bank and see what happens. Different banks are using different variations of the HARP 2.0 program. The edits are subtle, but they’re enough to cause some people to get denied who should otherwise have been approved.
What are the HARP program’s mortgage rates?
Mortgage rates for the HARP mortgage program are the same as for a “traditional” refinance. There is no “premium” for using the HARP program.
Will the Home Affordable Refinance Program help me avoid foreclosure?
No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It’s meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today’s low mortgage rates.
What are the minimum requirements to be HARP-eligible?
First, your home loan must be paid on-time for the prior 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. And, third, you may not have used the HARP mortgage program before — only one HARP refinance per mortgage is allowed.
My mortgage was securitized shortly after the HARP deadline of May 31, 2009. Can I get a waiver or exception?
No, there are no “date exceptions” for HARP. If your loan was not securitized on, or before, May 31, 2009, you cannot use HARP.
If I refinanced with HARP a few years ago, can I use it again for HARP II?
No. You can only use the HARP mortgage program one time per home. If you used HARP 1, you cannot use HARP 2.0.
I refinanced into a HARP loan a few years ago, but my bank never told me it was a HARP loan. I feel like I was lied to. Can I use HARP again under the HARP II program?
No. You can only use the HARP mortgage program one time per home. If you used HARP 1, you cannot use HARP 2.0.
Is there a loan-to-value restriction for HARP?
No. All homes — regardless of how far underwater they are — are eligible for the HARP program.
I am really far underwater on my mortgage. Can I use HARP?
Yes, you can use HARP even if you’re really far underwater on your mortgage. There is no loan-to-value restriction under the HARP mortgage program so long as your new mortgage is a fixed rate loan with a term of 30 years or fewer. If you use HARP to refinance into an adjustable-rate mortgage, your loan-to-value is capped at 105%.
Maybe I wasn’t clear. I am really, really far underwater on my mortgage. Are you sure I can use HARP?
Yes, I am sure. The new HARP mortgage program specifically has no loan-to-value restriction so that homeowners in Florida, California, Arizona and Nevada can take advantage of it. You can have 300% loan-to-value, and still be HARP-eligible. HARP is now unlimited LTV for fixed rate loans with 30-year terms or less.
If I refinance with HARP using an ARM, do I still get “unlimited LTV”?
No, if you use an ARM for HARP 2.0, you are limited to 105% loan-to-value. Only fixed rate loans get the unlimited LTV treatment.
Will my home require an appraisal with the HARP mortgage program?
Sort of. Although your home’s value doesn’t matter for the HARP mortgage program, lenders will run what’s called an “automated valuation model” (AVM) on your home. If the value meets reliability standards, no physical appraisal will be required. However, your lender may choose to commission a physical appraisal anyway — just to make sure your home is “standing”.
Is HARP the same thing as an FHA Streamline Refinance?
No, the HARP mortgage program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA. The programs have similarities, however.
I have an FHA mortgage. Can I use the HARP 2.0 program?
No, you cannot use the HARP 2.0 program for an FHA loan. If your current mortgage is backed by the FHA, and your home is underwater, use the FHA Streamline Refinance program.
I have a USDA mortgage. Can I use the HARP 2.0 program?
No, you cannot use the HARP 2.0 program for a USDA loan. If your current mortgage is backed by the USDA, and your home is underwater, use the USDA’s Refinance program.
I have a VA mortgage. Can I use the HARP 2.0 program?
No, you cannot use the HARP 2.0 program for a VA loan. If your current mortgage is backed by the VA, and your home is underwater, use the VA’s IRRRL program.
Does Ginnie Mae participate in the HARP Refinance program?
No, Ginnie Mae does not participate in the HARP Refinance program. Ginnie Mae is associated with FHA mortgages — not conventional ones. HARP II is for conventional mortgages only.
Do I have to HARP refinance with my current mortgage lender?
No, you can do a HARP refinance with any participating mortgage lender.
So, I can use any mortgage lender for my HARP Refinance?
Yes. With the Home Affordable Refinance Program, you can refinance with any participating HARP lender.
My current bank says that they’re the only ones who can do my HARP Refinance. Is that true?
No, that’s not true. Or, at least it shouldn’t be. There are very few instances in which a HARP applicant will be precluded from shopping for the best rate. It’s doubtful that your situation is one of them.
My current mortgage is with [YOUR BANK HERE] and I don’t like them. Can I work with another bank?
Yes, with HARP, you can work with any participating lender in the country.
I put down 20% when I bought my home. My home is now underwater. If I refinance with HARP, will I have to pay mortgage insurance now?
No, you won’t need to pay mortgage insurance. If your current loan doesn’t require PMI, your new loan won’t require it, either.
I pay PMI now. Will my PMI payments go up with a new HARP refinance?
No, your private mortgage insurance payments will not increase. However, the “transfer” of your mortgage insurance policy may require an extra step. Remind your lender that you’re paying PMI to help the refinance process move more smoothly.
My bank says I can’t refinance with HARP 2.0 because I have PMI. Is that true?
No, it’s not true. You can refinance via HARP 2.0 even if your current mortgage has private mortgage insurance.
Why does my loan officer tell me I can’t refinance with HARP because my current mortgage has PMI?
The new HARP program is exactly that — new. There are new rules and guidelines and not every bank is up-to-speed on what’s going on. If you’re hearing that you can’t refinance your current mortgage because it has PMI on it, that’s a signal that you’re working with sub-optimal loan officer. You may want to shop around.
My current mortgage has Lender-Paid Mortgage Insurance (LPMI). Can I refinance via HARP?
Yes, you can refinance your mortgage via HARP 2.0 if your current loan has lender-paid mortgage insurance (LPMI). It’s your loan officer’s responsibility to make sure that your new mortgage carries, at minimum, the same amount of coverage.
I have no idea what that means. How do I choose my PMI “coverage” when I refinance a HARP loan that has LPMI?
Don’t worry about it. Your loan officer will know what to do. Just make sure you disclose that your mortgage has LPMI so the bank knows what to do. Otherwise, your loan could be delayed in processing.
How do I know if my mortgage has Lender-Paid Mortgage Insurance (LPMI)?
To find out if your mortgage has lender-paid mortgage insurance (LPMI), locate your loan paperwork from closing. There should be a clear disclosure that states that your mortgage features LPMI, and the terms should be clearly labeled for you.
I don’t see an LPMI disclosure in my closing package but I think that I have it. How do I know if my mortgage has LPMI?
If there is no LPMI disclosure, first check if your first mortgage’s loan-to-value exceeded 80% at the time of closing. If it did, look to see if you are paying monthly mortgage insurance. If you are not paying monthly PMI, you’re likely carrying LPMI.
What’s the bottom line with HARP refinances and mortgage insurance?
With HARP, regardless of whether you have borrower-paid mortgage insurance (BPMI) or lender-paid mortgage insurance (LPMI), a refinance is possible. The key is that the new loan has mortgage insurance coverage at least equal to the mortgage insurance coverage on your current mortgage.
What if my lender won’t give me a HARP refinance because I have mortgage insurance?
If your lender tells you that you can’t have a HARP 2.0 loan because you have mortgage insurance, find a new lender. There are plenty that of banks that can — and want to — help you.
What’s the biggest mortgage I can get with a HARP refinance?
HARP refinances are limited to your area’s conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $625,500.
Can I do a cash-out refinances with HARP?
No, the HARP mortgage program doesn’t allow cash out refinance. Only rate-and-term refinances are allowable.
Can I refinance a second/vacation home with HARP?
Yes, you can refinance an second/vacation property with HARP, even if the home was once your primary residence. The loan must meet typical program eligibility standards.
Can I refinance an investment/rental property with HARP?
Yes, you can refinance an investment/rental property with HARP, even if the home was once your primary residence. You can refinance a home on which you’re an “accidental landlord” via HARP. The loan must meet typical program eligibility standards.
I rent out my old home. Is it HARP-eligible even though it’s an investment property now?
Yes, you can use the HARP Refinance program for your former residence — even if there’s a renter there now.
How long do I have to stay in my house if I use HARP on my primary residence?
There is no specific timeframe for which you’re required to stay in your home if you use HARP 2.0. Just like any other mortgage, if you plan to stay in your home post-closing, it’s your primary residence. If you plan to turn it into a rental, it’s an investment property.
These things I’m reading here… Why, when I call my bank, do they tell me it’s not true?
It’s possible that the call center representative to whom you’re speaking is neither knowledgeable about HARP, nor the actual mortgage underwriting process. This post is researched and cross-referenced against Fannie Mae and Freddie Mac guidelines, and publicly-available reports from the FHFA.
Are condominiums eligible for HARP refinancing?
Yes, condominiums can be financed on the HARP refinance program. Warrantability standards still apply.
Can I consolidate mortgages with a HARP refinance?
No, you cannot consolidate multiple mortgages with the HARP refinance program. It’s for first liens only. All subordinate/junior liens must be resubordinated to the new first mortgage.
What happens to my second mortgage when I refinance my first mortgage using HARP 2.0?
HARP 2.0 is meant for first liens only. Second liens are meant to subordinate. You’ll get to replace your first mortgage and your second mortgage will remain as-is. Just be sure to mention your second mortgage at the time of application so your lender knows to order the subordination for you.
My second mortgage isn’t backed by Fannie Mae or Freddie Mac. Is that a problem?
No, it doesn’t matter if your second mortgage isn’t backed by Fannie Mae or Freddie Mac. Second mortgages are ignored as part of HARP. They can’t be refinanced, and they can’t be consolidated. Second mortgages are a non-factor in HARP 2.0.
My bank is not setup for HARP and I want to refinance. What do I do?
If your current bank is not setup for HARP, find a new lender. HARP is available through any participating bank (and there are a lot of them).
Can I “roll up” my closing costs with a HARP refinance?
Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash. In no cases may loan sizes exceed the local conforming loan limits, however.
I am unemployed and without income. Am I HARP-eligible?
Yes, you do not need to be employed to use the HARP mortgage program. HARP applicants do not need to be “requalified” unless their new principal + interest payment increases by more than 20%. If the new payment increases by less than 20%, or falls, there is no requalification necessary.
What is the maximum income that a HARP applicant is allowed?
The HARP refinance program has no maximum income limits. You cannot “earn too much” to qualify.
So, I can’t earn too much money to use HARP 2.0?
No, there are no income restrictions for the Home Affordable Refinance Program (HARP). A similar-sounding program, though — Home Affordable Modification Program (HAMP) does have income limitations. Many people confuse the two.
Is HARP the same thing as HAMP?
No. HARP stands for Home Affordable Refinance Program. HAMP stands for Home Affordable Modification Program. Both programs are supported by the Making Home Affordable initiative, but that’s about where the similarities end.
I am now divorced. I want to remove my ex-spouse from the mortgage. Can I do that with HARP?
Yes. With HARP, a borrower on the mortgage can be removed via a HARP refinance so long as that person is also removed from the deed; and has no ownership interest in the home.
Do HARP refinances use Loan-Level Pricing Adjustments (LLPAs)?
Yes, HARP mortgages use loan-level pricing adjustments, but LLPAs are dramatically reduced on a HARP refinance and, in some cases, waived entirely. For example, there are no LLPAs for fixed-rare HARP refinances with terms of 20 years or fewer. For all other loans, loan-level pricing adjustments are capped at 0.75 points.
Does a HARP Refinances require LLPAs for a 15-year fixed rate mortgage?
No, there are no LLPAs for 15-year fixed rate mortgage via the HARP Refinance program.
Is there a minimum credit score to use the HARP program?
No, there is no minimum credit score requirement with the HARP mortgage program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.
Do I have to refinance my mortgage with my current lender?
No, you can do a HARP refinance with any participating lender you want.
My current lender tells me that if I want to do a HARP refinance, I have to go through him. Is that true?
No, it’s not true that you can’t shop for the lowest HARP refinance rates available. You are allowed to do a HARP refinance with any HARP-participating lender.
My bank called me for a HARP refinance. The rate seems high. Should I shop around?
Yes, it’s always a good idea to shop for the best combination of mortgage rates and loan fees. However, be sure to shop with reputable lenders that have experience underwriting and approving HARP mortgages. HARP 2.0 is a new refinance program and not many banks have expertise with them. You don’t want to have your loan approval fall apart because your lender failed to underwrite to HARP mortgage standards.
Where can I get the lowest rates on HARP loans?
The HARP program is just like any other mortgage — you’ll want to shop around for the best rates and service. However, because HARP is a “specialty loan”, you may want to limit your shopping with reputable lenders that know how to specifically handle HARP loans.
What are the costs to refinance via the HARP program?
Closing costs for HARP refinances should be no different than for any other mortgage. You may pay points, you may pay closing costs, you may pay neither. How your mortgage rate and loan fees are structured is between you and your loan officer. You can even opt for a zero-cost HARP refinance. Ask your loan officer about it.
What does the term “DU Refi Plus” mean?
“DU Refi Plus” is the brand name Fannie Mae assigned to its particular flavor of the HARP mortgage program. “DU” stands for Desktop Underwriter. It’s a software program that simulates mortgage underwriting. “Refi Plus” is a gimmicky-sounding term that could have been anything. The name has been trademarked, however.
What does the term “Relief Refinance” mean?
“Relief Refinance” is the Freddie Mac equivalent of DU Refi+.
For how long should I lock my mortgage rate via the HARP Program
Lock for 45 days, at minimum. This is because the HARP mortgage program, while streamlined for simplicity, still has some grey areas that can lead to delay. It’s better to have a rate lock that lasts too long than not long enough.
When does the HARP program end?
If you are HARP-eligible, you must close on your mortgage prior to January 1, 2014 –days from now.
How do I apply for the HARP program?
If the rate looks good, you can accept it. There is no fee for applying.
Apply For HARP 2.0 (Home Affordable Refinance Program)
Lastly, don’t forget! The Home Affordable Refinance Program is not meant to save a home from foreclosure. It’s meant to give underwater homeowners a chance to refinance without paying PMI. If you need foreclosure help, call your current loan servicer immediately.