New HARP Program reality

This week everyone I speak with seems to think the new HARP 2.0 changes will save everyone’s home and lower their payment. NOT TRUE. Lets slow down and look at the reality here.

Veronica Clemons, a spokesperson for Wells Fargo Home Mortgage, says the company is waiting for specific guidelines and requirements from Fannie Mae and Freddie Mac in order to put the changes into practice. She adds that once the company’s mortgage servicing team has the guidelines in hand, “it will take us some time – depending on the complexity of the guidelines – to make the necessary systems changes to begin offering the new enhancements to our customers.” The GSEs’ regulator, the Federal Housing Finance Agency(FHFA), says Fannie and Freddie plan to issue guidance with operational details about the HARP changes by November 15th.

Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers, and other market participants modify their processes,” FHFA said.

Bank of America says it will participate in the enhanced Home Affordable Refinance Program announced by the administration, and it expects the new guidelines and eligibility criteria to go into effect after December 1st, 2011. “Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage,” BofA spokesperson Rick Simon said. “HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”

The GSEs have removed the 125 percent loan-to-value (LTV) cap under the program. Now any borrower with anLTV ratio above 80 percent is eligible for a HARP refinance, as long as the loan was sold to Fannie or Freddie prior to May 31, 2009, and the borrower is not delinquent on their payments. Since HARP was launched in 2009, nearly 900,000 loans have been refinanced through the program. Government officials estimate that an additional 1 million homeowners will receive assistance under the new guidelines.

In its announcement of the program changes, FHFA encouraged borrowers to contact their existing lender or any other mortgage lender offering HARP refinances. This is where you need to be careful, millions of homeowners have been pushed into signing new Adjustable Rate Mortgages with heavy closing costs which only benefits the lender. A lot of people are unfamiliar with the GFE and TIL ( Good Faith Estimate and Truth In Lending ) documents to clearly see what they are getting themselves into.

If you or anyone you know needs help clarifying these documents, please let us know. There is never any cost for our consultations.

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