HARP Applications Increasing Under Looser Qualifications

A recent government report indicates that more homeowners who are "underwater," or owe more on their homes than they are worth, have been taking advantage of an expanded Home Affordable Refinance Program (HARP) to refinance their mortgages and obtain lower interest rates. Industry experts predict that the numbers will continue to increase since qualifications have been loosened.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued its June report, which states that in the first quarter of 2012 180,000 mortgages were refinanced through what is known as HARP 2. That is nearly double the 93,000 HARP refinances in the fourth quarter of 2011 and the highest quarterly number since the HARP program began in 2009.

HARP was created by the federal government to help homeowners whose mortgages are owned or guaranteed by Fannie or Freddie and made before May 31, 2009 refinance into loans with better terms. The HARP program was expanded in the fall of 2011 with several modifications, which included the removal of certain fees and a second appraisal, and the extension of the deadline to December 31, 2013.

Addtionally, the cap was removed on the loan-to-value ratio. When the program began there was a ceiling of 125%, meaning that loans could not be underwater by more than 25%. Since the beginning of 2012, 4,400 loans with loan-to-value ratios greater than 125% were refinanced according to the Federal Housing Finance Agency report.

However, because of the boom in HARP 2 refinancing combined with other refinancing, due to historically low interest rates, some lenders have been facing large backlogs in applications. Therefore, underwater home owners will need to be patient with their lenders. Homeowners can supply much of the necessary information for refinancing through a secure website in addtion to personal interviews.

JPMorgan Chase has been focused on offering HARP refinancing to current customers who have mortgages serviced by the bank, as have been many other lenders. Borrowers can also contact any participating lender, though finding one that accepts HARP applications from new customers may be challenging. Chase has been mailing letters to customers who prequalified for HARP 2 refinancing. These letters offer borrowers reduced rates with no closing costs and closing in 30 days if homeowners can show verification of employment.

Under federal guidelines, HARP borrowers must be current on their monthly mortgage payments, though they may have had one late payment, provided it occurred at least six months before they applied to the HARP program. Homeowners with private mortgage insurance will generally be allowed to carry that over to the new refinanced HARP loan. However, borrowers with a second mortgage must get the lender of that loan to agree to the HARP refinancing.

If you are unable to obtain refinancing for your mortgage and are either currently behind on your mortgage payments or are facing foreclosure, please contact me for a free initial consultation. I can help you determine if bankruptcy is the right option for you. I can also help you file bankruptcy in Kansas or Missouri. I can also help you prevent foreclosure. Please leave any questions or comments below.