HARP Refinance FAQ
The Home Affordable Refinance Program 2.0 has received much press over the past few months (Oct 2011 through February 2012). Since most of the previous special refinance programs announced by the government have failed to deliver for most California home owners, there are many questions regarding this newest program. Below are some of the more common questions. Of course, please feel free to contact me (Tim Storm) if you have any specific questions regarding your situation.
Q1. Do I have to go through my current lender, or am I allowed to refinance through a new lender?
A1. Most Fannie or Freddie Mac refinance prospects will be approved through either Fannie Mae’s “Desktop Underwriter – DU” or Freddie Mac’s “Loan Prospector-LP”. If the outside lender is able to get the automated approval, they will be able to do the loan.
Q2. How to I determine if my loan is a Fannie Mae or Freddie Mac loan?
A. The quickest way is to go to the Fannie Mae or Freddie Mac websites and enter your address information. Freddie Mac also requires the last four digits of your social security number. For many California HARP refinance homeowners, it may just be easier to contact a HARP Refinance specialist who can quickly do a “lookup”.
Q3. What if I have a 2nd mortgage/Home Equity Line of Credit on my California home?
A3. Not a problem. The is not a maximum “combined loan to value”. However, the current 2nd mortgage holder will need to agree to remain in second position. The 2nd will need to be “re-subordinated.” The new lender can help with the paperwork.
Q4. How long will the Home Affordable Refinance Program exist?
A4. The Note date on the loan must be on or before December 31, 2013. That means that, yes, there is some time. But why wait when rates are already so low?
Q5. What is “borrower benefit”and how is it met?
A5. Fannie Mae and Freddie Mac want to make sure there is a benefit to the borrower in doing a refinance. If any of the following are met, the borrower benefit has been satisfied.
- Reduction in the California borrowers monthly principal and interest;
- Reduction in the interest rate;
- Reduction in the amortization term – for example to a 15 year fixed; or
- Movement to a more “stable” loan product. For example, going from a 5 year ARM to a 30 year fixed.
Q6. Can a borrower be removed from the loan through a HARP refinance?
A6. Yes, provided that proof can be shown that the remaining borrower has been making payments on their own for the most recent 12 months. 12 months cancelled checks is the most typical way to prove this. The funds cannot have come from an account held jointly with the other person on the loan. Also, the borrower being removed must also be removed from title.
Q7. Can I combine my first and second mortgages through a HARP Refinance?
A7. No. The second will need to be subordinated.
Q8. I now rent my property out to tenants. Can I still refinance?
A8. Yes. Owner occupancy is not a requirement for this program. As a matter of fact, there is little, if any, difference in the interest rate between an owner occupied HARP refinance and a non-owner occupied HARP refinance.