On August 6th, 2013 President Obama seemed to breath life into HARP 3, which is an underwater refinance program for responsible homeowners that may not qualify for HARP 2.
HARP 3 would be an expansion of the HARP 2 program that is currently in effect through December 31st, 2015.
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HARP 2 Explained
The Home Affordable Refinance Program (HARP) was created to allow responsible homeowners to take advantage of today’s low interest rates regardless of having negative equity, or being upside down.
A responsible homeowner is defined as an owner that is current on their mortgage, and unable to qualify under normal underwriting guidelines due to lack of equity.
Here’s a quick test to determine if you are eligible to qualify for a HARP 2 loan:
HARP 2 may be an option if
- You have had a good payment history for the past 12 months. That means having no late payments in the last 6 months and no more than one 30-day late payment from 6 to 12 months ago.
- Your home is your primary residence, 2nd home or investment property.
- Your home value has decreased.
- You have limited equity or your first mortgage exceeds the current market value of the home (i.e., your loan-to-value ratio must be > 80% to be eligible).
- Your loan is owned or guaranteed by Fannie Mae or Freddie Mac. Check the Fannie Mae Loan Lookup tool.
- Your loan was acquired by Fannie Mae or Freddie Mac on or before May 31, 2009 (this date can be found in the Loan Lookup results).
HARP 3 Rumors
There have been several conversations happening around HARP 3, and the only thing we know for sure is that it is supposed to relax guidelines to include mortgages not owned by fannie mae or freddie mac.
Responsible Homeowner Refinancing Act of 2013
This bill is being authored by U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) with the goal of creating a level playing field and streamline the HARP underwater refinance program.
Introduced as Senate Bill S.249 on February 7th, 2013, the Bill was referred to congressional committee as H.R.736 on February 14th, 2013.
If passed, it is possible that HARP 3 will make HARP 2 obsolete as it completely changes the qualifying requirements for underwater homeowners looking to refinance, regardless of who the servicer is.
As proposed, qualifying for a HARP 3 may be as simple as:
- On-time payments for past 12 months
- Verification of employment (but not income)
- Refinance regardless of servicer (not FNMA or FHLMC)
The Responsible Homeowners Act of 2013 seeks to level the playing field by allowing non-servicing lenders to streamline the process and follow the same streamlined processes that loan servicers enjoy.
The streamlined process is already available for homeowners that have a FHA or VA mortgages. The streamline process of these two loan programs are the model for the streamlined process of the HARP 3 under this proposal.
Even as interest rates rise, affordability is still very high, and rates do continue to remain historically low on a wide range of products.
A program like HARP 3 would bring great relief to many California homeowners. Let’s hope we more more news soon about unsticking this bill and moving it through the system.
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