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Important HARP Update:

On November 15, 2011, Fannie Mae and Freddie Mac released updated guidelines for the newest version of the Home Affordable Refinance Program.  The updates are designed to help as many as one million homeowners refinance at today’s low mortgage rates.

It appears that many lenders are going to participate in the program, although we won’t know for sure until individual investors release their own overlays for this program.

Some of the key features of the program include:

• HARP is now extended through the end of 2013.
• In order to be eligible, loans must have been purchased by Fannie Mae or Freddie Mac before May 31, 2009 and have loan-to-value ratios of at least 80%.
• The 125% LTV cap on fixed rate mortgages has been eliminated (there is still an LTV cap of 105% on adjustable rate mortgages).
• To qualify, borrowers must be current on their mortgage for the last six months, and have no more than one late payment over the past year.
• New appraisals may not be needed to qualify.

As more details of the updated program emerge, we will update this space.

On October 24, 2011, the Federal Housing Finance Agency announced that it is making a series of changes to the Home Affordable Refinance Program (HARP). The changes are intended to allow even more underwater homeowners refinance under HARP. The biggest change is the elimination of the 125 LTV ceiling on HARP loans. This means that theoretically, a borrower can refinance no matter how far they are underwater.

Some of the proposed changes include:

• Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
• Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
• Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
• Eliminating the need for a new property appraisal where there is a reliable AVM
• (automated valuation model) estimate provided by the Enterprises; and
• Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Only those who have a job and are current on their Freddie Mac- or Fannie Mae-owned mortgages are eligible for the new program. Those who have already refinanced with HARP are not eligible.

Edward Demarco, the Acting Director of the FHFA commented:

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach. 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”.

Fannie Mae and Freddie Mac will issue guidance on the HARP updates to lenders and servicers by November 15, 2011. At that time we should have additional clarity on the eligibility requirements for the new version of HARP. It is possible that these changes could take effect as soon as December 2011.

Harp Mortgages

As a part of the federal government’s Making Home Affordable program, HARP mortgages (Home Affordable Refinance Program) will make a significant impact in reviving the housing industry in America. HARP mortgages are supported by Fannie Mae‘s DU Refi Plus™ and Freddie Mac‘s Relief Refinance℠ Mortgage. The intention of HARP mortgages is to assist approximately 9 million homeowners nationwide to refinance their existing mortgage loan into a more manageable monthly mortgage payment. HARP mortgages have two main components:

• Home Affordable Refinance
• Home Affordable Modification

Home Affordable Refinance is designed to benefit homeowners who make their monthly mortgage payments on time, but are unable to refinance to take advantage of the historically low mortgage rates due the decline in value of their homes. HARP mortgages will allow borrowers whose loans are owned by Fannie Mae or Freddie Mac to refinance their existing mortgage up to 105% of its current value, while enabling them to secure a significantly lower mortgage rate.

A Home Affordable Modification will enable homeowners who have been struggling with paying their monthly mortgage payments — because their current mortgage rate has adjusted or they became unemployed — to refinance into a new mortgage loan with monthly payments they can afford.

Borrowers have until June 2010 to take advantage of HARP mortgages.

Rates for HARP Mortgages: The current mortgage rates for HARP mortgages are at historic lows. Because HARP mortgages are only available until June 2010, and because HARP mortgages have such low rates, the time to refinance is now!

About Total Mortgage

The mortgage professionals at Total Mortgage have the experience and know-how to find the HARP mortgages that will benefit your financial situation. Total Mortgage has been an industry leading broker and lender since 1997, funding more than $4 billion mortgage loans.

Let our knowledge of the mortgage industry benefit you by allowing us to get you into a more affordable mortgage loan. Our qualified mortgage professionals will keep you informed every step of the way, from application to closing.