If you haven’t read the latest official guidelines for the revamped HARP 2 or HARP 2.0 program, here they are:
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
(Taken from the official Home Affordable Refinance Program website http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx)
The major change is not reflected in the list of guidelines. The biggest change is that there is no loan-to-value (LTV) cap to refinancing a home, meaning that, if your new modified loan is still above 125% LTV, the loan can still be refinanced, allowing borrowers to take advantage of lower interest rates even thought their home is in an underwater loan. This change looks like an advantage for the banks. Instead of giving up any principal on the loan to get the loan closer to the value of the home, the program is encouraging the banks to give up some of their interest rate instead. This may only provide a limited amount of relief for borrowers.
Be aware of all the qualifications before getting your hopes up for the HARP 2 program. The most difficult of them have stayed the same or even gotten stricter. You still can only participate in this program if you have a Fannie Mae or Freddie Mac loan which basically excludes all of the sub-prime borrowers. Your loan needs to have been secured in 2009 or earlier to qualify. You also can’t have any late payments in the last 6 months.
If you decide to apply for the program with your lender, you should be aware that lenders can add any of their own requirements to the program in order to qualify. There are NO RULES for lenders to add more requirements to what the government has already set as guidelines.
HERE’S OUR MOST IMPORTANT WARNING TO THOSE LOOKING FOR ASSISTANCE THROUGH HARP:
You cannot expect your trustee sale date or foreclosure auction to automatically be suspended due to the submission of a HARP Loan Modification application. If your lender is telling you that the application is “being processed”, don’t expect the processing time to interrupt your foreclosure proceedings. A foreclosure sale may still be executed even if your lender is telling you that your application is being processed. Some clients have come to our office and told us that their loan modification application has been “processing” for several months. It doesn’t take an insider to figure out that your loan modification application is not being processed if several months or even several weeks have gone by without any response. Your loan mod app is basically sitting in a pile that is not moving fast enough for you to get a result. Don’t depend on the lender to contact you and suddenly come up with a dream loan modification for you if they have been keeping you at bay for a long period of time. You can look at your application yourself and see that it should not take one week to process the application. If the bank was interested in helping you, they would process it in a few days. Be careful to keep an eye on your looking foreclosure auction or sale date. If you haven’t heard from your bank about your loan mod and your house is up for auction, call Bankruptcy Law Professionals to stop the foreclosure sale.
If you get into a “trial loan modification program”, your trial payments may still not be posting to your normal mortgage payments. Your increasing past due mortgage amount or arrears will continue to grow larger and larger as it accumulates through the trial loan modification plan. Don’t let yourself get caught in a trap that is not in your control. You can look at your options in Chapter 7 or Chapter 13 to save your home. If your bank is not cooperating with you, take the control back into your hands and force them into action with a bankruptcy filing.
Bankruptcy Law Professionals save people’s homes everyday with our legal services. We use the law and the bankruptcy code to save homes. We don’t gamble with legal theory that may not be as effective.