HARP 2.0 - New FNMA/FreddieMac Mortgage Relief Refinance program released

Participating Lenders are scheduled to start funding  qualifying loans March 17, 2012.

Basic refinance criteria: 

1. First Trust Deeds for the most part. Junior Liens should subordinate.
2. Any LTV / CLTV (Lender may have overlays).
3. Maximum Debt to Income "DTI" ratio 45%. (A big hurdle for those who have been struggling).
4. Zero late payments in past 6 months. Only 1 late in past 12 months allowed.
5. The loan must be backed by Fannie Mae or Freddie Mac.
6. Current mortgage must have been originated prior to June 1, 2009.  
7. Original loan amount $417,000 or below.

Notes: Investors/lenders may impose stricter criteria. This is an optional program and most banks are not participating.  I have heard of pressure on the adminsitration to stall or forgo the program due to banks natural desire to not allow everyone to reduce their rates and bank profitability on less than perfect loans with high risk attributes. May be a downward spiraling problem.

Question and Answers

1) How do I know if Fannie Mae or Freddie Mac has my mortgage?  They have "lookup" forms on their websites.

       FNMA: http://www.fanniemae.com/loanlookup/

       FREDDIE: https://ww3.freddiemac.com/corporate/

3) Am I eligible for the Home Affordable Refinance Program if I'm behind on my mortgage? No.  No late payments in the past 6 monhts. 

4) If I refinanced with HARP a few years ago, can I use it again for HARP 2? No. One time only. 

5) I am severely far underwater on my mortgage. Can I use HARP? Yes. No LTV restriction now.
6) Is  mortgage insurance required for LTV 's greater than 80%. Only if the loan currently has MI.

7) Can borrower(s) be removed through the refinance transaction? Yes

8) Is any "cash out" allowed on the refi? No. However you can include typical closing costs and impounds required. Or, if you can get lender paid closing cost credit even better. 

9) Can I include my 2nd Td/HELOC? No. However 2nd TD lender may subordinate, as they are now to be "indemnified against future losses". Most lenders will co-operate ....but will restrict the increase of the 1st to just 10%....which should be acceptable. Many of the big four banks have huge 2nd TD portfolios that will be protected by guarantees under the new programs if they complete the HARP 2.0 refinance.

10)  Are the rates at current market lows?  They are a little over current market. And can be affected by low credit scores.

11)  Does this program cover investment property? Yes. LTV limited to105%.

12) Is an appraisal required? No, but may require property condition "inspection". Borrowers with marginal credit scores AND high debt ratios MAY be required to have "appraisal". But the "appraisal" is simply a housing inspection to determine the CONDITION of the property.

13)  What are the terms of the loan(s)? 30, 20, 15 yrs.  

 Summary comments:
In addition, you are advised to only work with knowledgeable and highly experienced mortgage loan officers or brokers. These can be complex, and you want to ensure a reasonably smooth process and likelihood of success if you are to spend the time to do one.

 Borrowers are encouraged to apply now. To register your loan request and get pre-approved quickly go to our proprietary home loan automated underwriting system at www.ePrequal.com .
By answering a few simple questions, you will be run through our loan prequalification system and registered to begin the application process. One of our Senior Loan Officer will contact you within an hour to discuss your situation.

Dave Van Waldick
Western Mortgage (a subsidiary of Western Realty Finance / nmls#345616)

Off/Cell: 760-599-1261

PS: "As Home Ownership Experts, we provide an integrated suite of strategic financial solutions."

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Top things that make mortgage deals very difficult!

Periodically I see patterns of loans that just are not getting done and are too difficult to work on. This is just the tip of the iceberg of loan problems. To ensure you are getting the best mortgage advice from an experienced professional, I higly recommend working with a mortgage broker with minimum 5 recent years in the business and having done at least 100 loans of more. That ensures they have are knowledgeable and focused on the details that kill deals.

Currently, these issues are making some loans not worth trying. I highly recommend not working on them. In addition, t ties up processors and takes up excessive time and worse, do not close. If you see any of these indicators, please be very careful about originating them.

Problems:

1. Credit scores on ANY loans less than 640. That is Conventional, FHA, or VA. In know lenders they can do them. We have tried repeatedly and they can not deliver or the time lines are so long the deals die on their own.

2.       Manufactured homes. Forget it. They don’t get approved with most of the lenders today we have.

3.       One off deals. You know the type; 2^nd home, owned by a corporation, that assumed the note from the prior borrower and now grants it to the employee as a bonus.

4.      Commercial loans – While these can be done, the unique nature of each loan and difficulty of finding the right lender, precludes most mortgage brokers from being effective in this area. If you need a commercial loan, find an expert in that area. It will save you time, and increase the chances of a successful funding and satisfied client. 

5.       Hard Money loans – We can do them but they are expensive, and I have yet to have a borrower agree to the terms. Unless the borrower is a bona-fied short term investor, it is typically not worth the time pursuing these. Having said that, there are times when private party funds are exactly they right thing. Read my blog article here: http://www.mortgagedave.blogspot.com/2011/03/private-party-financing-ppf-when-to-use.html

6.       Broken income, non reported income, non-occupant co-borrowers, second homes in the same city to get owner occupied rates, etc. Forget all these. They are far too difficult and most of them end up dead. Waste of your time, and more importantly distracts our processors from deals that can close.

7.      Non ARMS length short sale transactions – IF you become aware of one of these in your deal, don’t do it. The short sale lenders and new investors are getting very good a detecting these and fraud now under NMLS and/or FHA is a federal offense “felony”. Not worth it for you or the company for a  few thousand dollars.

8.       Loan Amounts under $100,000 – Not enough “juice” in most of these. If they are out of state through don’t even try.

9.   High LTV refis – Most of the lender guidelines pretty much kill refinances where the LTV is over 90% except FHA/VA streamline refis.

10.   Be careful of condos. Be sure the project is FNMA or FHA/VA approved. No more spot approvals. Now some lenders will not do high rise (over 7 stories) or mixed use.


Rate Locks: In addition to these difficult deal killers, the other issue we fneed to be aware of keenly as I have mentioned before is rate locks. Rate locks generally should be ollow some general rules to insure they are likely to lead to a completed loan and satisfied client:

• Have a completed, signed application, and signed full set of disclosures and accepted GFE.
• Complete package of documents from borrower in the office (pay stubs, tax returns, bank statements, etc). You know the list.
• At least a preliminary DU / AUS approval from the lender where the loan is going. No sense locking a loan that is not getting approved.
• Borrower has paid for appraisal and it has been ordered it.
• Minimum 30 day locks. Due to unknown issues that often extended underwriting and close times, I would give everything and extra 10-15 days.

Lenders all track pull through and are not happy when brokers or Loan Officers fail to deliver on locks. If you work with good lenders and can not afford to be cut off.

Yes, I know there are many variations on all these issues. But, taking the time to analyze deals and properly pre-package them makes the financing move much better.  In addition, cances of sucessful transactions increase exponentially when we stick to what we know and are good at.

Dave Van Waldick
Mortgage Broker - 22 years and growing
Western Realty Finance
Home Ownership Financing ExpertsOff/Cell: 760-599-1261
NMLS#345616 / CA DRE# 01065844

Home Buyer pre-Approvals in 5 minutes: www.ePrequal.com