Should You Apply for a HARP Refinance or a HAMP Modification? You Better Know Before You Start

Many homeowners who have less equity in their home are confused about their options available improving their loan terms. Should they be asking for a HARP (Home Affordable Refinance Program) refinance or a HAMP (Home Affordable Modification Program) modification? What the homeowner doesn’t know is they better find out before they call their lender. If a homeowner calls about lowering their payments and the customer service representative perceives the request as a modification, they may submit an initial application for a HAMP modification without the homeowner knowing exactly what they’re applying for. oops key

That’s where the problem begins. HARP guidelines state that a homeowner who has applied for a modification CAN NOT refinance using HARP guidelines.  Homeowners who qualify for a HARP refinance and do not qualify for a HAMP modification may be destroying their only chance to reduce their payments without knowing it.  Once they submit their HAMP modification application, they disqualify themselves for a HARP refinance.

Why does this guideline exist?  It’s simple.  HARP  was designed to help homeowners who are not in hardship refinance to better loan terms where their only hurdle is available equity.  These homeowners should have average to excellent credit profiles and would not need the assistance of a special program if their home had not dropped in value.  HAMP modifications are designed to assist homeowners who are in hardship in risk of losing their home and do not qualify for a HARP refinance.  These homeowners should be in financial hardship and do not qualify for a refinance.  When the customer submits an application for a modification, it disqualifies the client for a HARP refinance because the lender now perceives the customer as someone who must be under some form of hardship, which would make a refinance a high risk.  This stays on record and will continue will prevent the homeowner from refinancing through any HARP lender.  OUCH!

I have a client who has been shopping multiple lenders for a HARP refinance for months.  His income and credit are very good.  One of the first people he contacted was his current lender.  After moving from one representative to another, he eventually talked to a loan officer about a HARP refinance, but not before a previous representative submitted an application for a modification.  Unbeknownst of this unique HARP guideline, the homeowner assumed they would qualify for HARP without any issues.

He eventually chose the terms I offered and we ran his loan through underwriting.  We then get a code indicating the homeowner had applied for a modification.  The homeowner can only apply for a modification through his current lender, so there is only one way this could happen.

How many homeowners are calling their lenders to get their payment reduced and are disqualifying themselves because the lender doesn’t know what the homeowner is applying for?  One easy solution is to apply for a HARP loan with a lender other than your current lender.  HARP allows other HARP lenders to refinance a homeowners loan but a modification must be applied for through the existing lender.

Don’t let this be you.  Both programs are designed to help homeowners lower their payments who plan on staying in the home.  Apply for a HARP refinance first.  If you’re turned down, then you can proceed with a HAMP modification.  It’s your only of applying for both programs without shooting yourself in the foot.

UPDATE:

I spoke with a reader who had the exact OPPOSITE thing happen to them.

The HARP loans sometimes do not require a debt-to-income calculation.  Some people who are eligible for HAMP (modification) or HAFA (special short sale program) are restricted from refinancing their loan on HARP first.

My reader did a HARP loan which lowered her payment, but not enough to get her mortgage affordable. She took it anyways thinking it was her only option.  Unfortunately, she is now ineligible for a HAMP modification or a HAFA short sale.

HAMP modifications and HAFA short sales are for homeowners who are in hardship.  If you are in hardship and the HARP refinance isn’t lowering your payment enough to save your home, you should inquire about a HAMP modification and HAFA short sale before you choose which path to take.

 

 

Learn more about how to qualify for a HARP refinance here.

UPDATE:

The deadline for HARP loans has been extended until June 30th, 2012 (1-year).

UPDATE:

HARP has been extended again through the end of 2013.

 

 

Related Posts:

Another Flaw with the HARP Program

Homeowners Guide to HARP

90 comments to Should You Apply for a HARP Refinance or a HAMP Modification? You Better Know Before You Start
  • Moe

    Dear Keane Loans,

    I have done some research and cannot verify that a HAMP application disqualifies one for HARP. Can you provide a reference to this claim?

    Thanks

  • Moe,

    When we originate a new Fannie Mae or Freddie Mac loan, we run it through their underwriting engines, which are software programs that calculate the risk of the loan. If the loan had a modification application, they mark it in their database and the engine’s turn down the file.

    I have had multiple people who I haven’t been able to help for this reason.

  • Moe

    Keane,

    I appreciate the reply. Although I do not contest the experience you have had with multiple borrowers, I am still looking for something written or published by Freddie or Fannie.

    After further research, I found the following FAQ document on the Fannie Mae website (www.efanniemae.com).

    https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf

    This is a quote from Q11 on page 5:

    “Borrowers who were denied a HAMP permanent modification are eligible for Refi Plus provided they meet these payment history requirements and the lender is satisfied that the circumstances relied upon by the borrower to apply for the HAMP trial modification have been resolved.”

    I have not found any direct reference to this issue on the Freddie Mac website but I will keep looking.

    Please let me know if you have any documentation contradicting the FAQ from Fannie.

    Thanks
    Moe

  • Moe,

    You hit it right on the nail. This is what you were referring to:

    “…the circumstances relied upon by the borrower to apply for the HAMP trial modification have been resolved.”

    I’ve worked with borrowers to try to get this resolved and they can never get Fannie or Freddie to update. I’m waiting for someone who has, but at this moment, we haven’t had any luck.

  • Lou

    Moe,
    Keane is right. Unfortunately, you wont find it in the site, because they dont want you to know. Neither lawyers nor the mortgage servicer (your bank) does not tell you. I think is to keep us poor, but hey thats my opinion. I am an example of that. Everyone told me to Loan-Mod, without the HARP option. Well, what HAMP does, it puts you in a payment plan for 3 months if you qualify. The amount you pay is way below the payment you usually send in monthly. This affects you with the bank as in the bank thinking you are not paying the full amount. Since you are not paying the correct amount for three months in a row, you are delinquent for failing to pay. This ruins your credit and your status with Fannie Mae as an “on time payer”. So, you are denied the Loan-Mod and say “well, let me try HARP”, well HARP says you have to have paid on time for 12 consecutive months, but since you were in HAMP for 3 months delinquent, you cant qualify. Its a scam. Nobody tells you about HARP first until its too late.

    I WANT TO THANK KEANE for putting this up. Its too late for me, hopefully others will find this site.

  • Moe

    Lou, Keane,

    I agree with both of you in the sense that a late payment in the last 12 months will disqualify you from HARP. I also agree that the BS “trail period” (I too am frustrated with this) required for HAMP asks that you pay less and the bank could mark you as delinquent/late.

    However, when I entered my trail period 6 months ago, I refused to pay less than my current loan required. I made full payments, on time, for three months. Wells Fargo never marked me late, my credit score is currently >760, and my mortgage history has 0 negative marks with the 3 credit bureaus.

    Since I don’t have any late payments in the last 12 months (and I meet all the other HARP criteria), I fully qualify for HARP even though I applied for and was denied HAMP.

    My point is this; the article above implies that simply applying for HAMP or being denied after the trail period alone will disqualify you from HARP. It suggests that an account is flagged as “has applied from HAMP”. However, this is not correct. What disqualifies you from HARP is not this nonexistent flag, nor the fact that you have applied for HAMP; it is the act of paying less than your loan amount during the trail period which in turn gets recorded as a late payment that disqualifies you from HARP. The key word is the late payment.

    If you have gone through HAMP and do not have a late payment on your record, you are still eligible for HARP.

    I know some people who did pay less then their loan amount during their trail period and were not marked as late. Instead, the servicer temporarily set their account description as “partial payment” which is removed after the trail period is over. Those folks are still qualified for HARP.

    I suggest this point be made in the article above to avoid any confusion.

    Thanks
    Moe

  • Moe,

    I know what you’re saying and trust me, I know the guidelines for HARP but I’ve had clients who never went through trial periods have their automated underwriting rejected due to their modification application. It was a Freddie Mac Open-Access loan. Was your loan a Fannie Mae HARP loan?

    There are so many small hurdles we face in closing these loans that I need to share my experiences. ESPECIALLY the ones that appear to fit the guidelines but are still being turned down.

    Give us details of your scenario and updates based on your experience will be added to the blog. I really appreciate your contribution.

  • Moe

    Keane,

    Owner Occupied Condo in San Diego, Servicer is Wells Fargo, loan with Freddie Mac. Doing a same servicer HARP refinance at ~115% LTV. My credit score is >760, no late payments. Applied for HAMP with Wells Fargo, went through the trail period Nov-2009 to Jan-2010. Ultimately did not qualify for HAMP since my DTI ratio was 26% (less than the 31% required). I was quoted ~5.25% 0 points for a 30-year. My current load is at 6.25% 30-year.

    So far things are going well with the HARP. Taking longer than expected but i have been given no reason that I will not qualify.

    Moe

  • Moe,

    Other than being in San Diego, your situation is identical to a client I talked to. Same thing, everything looked fine, not behind on trial period payments, good credit, the whole nine but his Loan Prospector findings wouldn’t approve.

    Get your lender to send you your Loan Prospector findings stating you’re approved for Open-Access.

  • Moe

    Keane,

    Looks like Freddie Mac does not require full underwriting with Loan Prospector when doing a same servicer.

    Maybe this is what’s making the difference between me and the client you mentioned above?

    Moses

  • Moe,

    Ah…yes, if you’re with the same servicer, they can do a manual underwriting refinance and not use their automated engine.

    It almost sounds like a scam. Purposely turn in mod papers so the automated engine turns the client down if anyone else tries to do a HARP loan, which only the current lender can do, but they then become the only lender who can issue a HARP loan. Sounds like a great way to monopolize the business.

  • Moe

    Keane,

    Interesting theory. I had not thought of it that way. I totally agree, both HAMP and HARP are a scam. I don’t know anyone who has been successful.

    Seems like those who were irresponsible when purchasing a home they could not afford get to stay in their big homes with fancy modifications. But people like me, who bought a modest condo which i could afford cannot take advantage of any program. Now i am stuck underwater as a result of the irresponsible.

    Very frustrating.

    I will keep you updated on my HARP.

    Thanks

  • Oleg

    Keane and Moe,

    Did you manage to refinance under HARP with Wells Fargo? I am trying to do that as well with BOFA. In Jan 2010 I applied for HAMP (was trying to refinance but they said HAMP is better), paid full payments for two months instead of partial and then cancelled myself out of the HAMP after realizing that BOFA is trying to screw my credit (they did not have enough time). Recently I called them and inquired about HARP and they said I qualify for it even after they saw I applied for HAMP before. They quoted 4.5% with 2.875 points and total $10500 in closing costs (+ escrow for property tax) for loan of $256,000. Without points I qualify for 5.375%. I did not go through the process yet because I was trying to shop around for a better rates/closing costs but I guess now I HAVE NO OTHER WAY BUT TO GO through BOFA.
    Keane,
    Am I correct?

    Thanks.

  • Moe

    Oleg,

    So far Wells Fargo has stated that i am eligible for HARP but i am still waiting for full approval. I decided not to waste time with open access or another servicer. I figured since same servicer is a complex process, open access would only add more variables and make things worse.

    I will keep you posted. Please let me know how your application goes as well.

    Thanks
    Moe

    P.S. Wells Fargo employs bunch of morons!! I am not dealt with more incompetent people in my life. Just thought i would vent a little.

  • Oleg

    I will definetely do. I though BOFA has the biggest number of dumb people but I guess not. May be they outsource all calls to one place.
    I am trying to get through a friend of mine (he is local mortgage broker associated only with one lender). He promised (in case he can do my refinance) the time will be no longer than 3 weeks.

  • Terry Stewart

    If I get the HARP refi, which I have been approved for through BofA, will I still be able to get the HAMP modification later? I know my income will be having a substantial decrease in my income next year (realtor) and I don’t want to mess up my chance for a modification. In Oregon and we are a targeted area now. Hearing from others that mods are suddenly being approved left and right.

  • Oleg,

    If you’re comfortable getting an appraisal and that the value will come in, you can definitely do better in price. Bank of America’s HARP loans are not competitive in price but they do have an advantage in that they do not have to order an appraisal.

    As for the venting on the service, just remember that by default, the chance of getting somebody there who isn’t helpful is much greater. Operators are forwarding customers to do a modification when they should be directing them to loan officers for HARP. Then the loan officers are not always experienced. Calling a bank to find a loan EXPERT isn’t a a realistic goal these days. It’s like hoping you can get great healthcare or legal advice from somebody who makes $15 an hour. It’s nobody’s fault, just a reality. It’s often worst when dealing with credit unions. The people mean the consumer no harm, but they conflict harm due to their inexperience. It’s not as big of a deal in a good market where loans can be easily saved, guidelines are looser and the economy is strong but in this market, consumers can’t waste time or money on an appraisal to be told they’re denied a loan they NEED.

    Just my two cents.

  • Terry,

    I don’t know the answer to that question. Most people who do HARP expect to use the savings to save them long term. If the new HARP rate is too high for you to qualify, you should seek help on a modification now instead of later.

  • Oleg

    Keane,
    Thanks a lot for your response. I spoke to few real estate brokers locally to find the approximate price for my property and it stands on average 245K. Fannie Mae keeps my value at 232K (that is what Bank Of America told me). I owe 250K. If I go through appraisal unit of Bank of America I will get screwed even more because they use LandSafe… No real estate broker uses them here because they compute unreasonable low estimations. What a mess?

  • Terry Stewart

    Yes, I agree. My LTV is just under 105%.

    The retail BofA called me and offered 5.375 with 1.125 in loan fee plus all other costs. I was laughing hysterically. Aren’t they being so good to their customers that PAY!!! The approval I got was from a broker I know at 5% with no fees or refi costs.

    I had heard that by getting the refi, I have now originated a new loan and therefore it would not qualify date wise for the modification if I chose to try and do that later. Such a catch 22. Last year I know I didn’t make enough to even be approved for the mod, this year I have made too much. I suspect next year will be ugly.

  • Terry,

    I was thinking the same thing but as it relates to HARP loans. HARP is only eligible on loans that were originated and securitized by Fannie Mae and Freddie Mac by March of 2009 and May of 2009 respectively. Any loan originated afterwards doesn’t qualify. When I saw your question, the first thing I thought of was whether the same kind of stipulation applies to HAMP, which from what you’re saying, it sounds like it does.

    If you absolutely do not feel a HARP loan will do the trick, I guess you may want to try a modification but remember that HARP loans are handled like regular refinances, so the process is more streamlined and has a higher success rate. The amount of loans being modified these days is pretty low and the percentage of them getting long term-permanent modifications is even lower, so it’s a gamble.

  • Oleg

    Gents,
    To all that have PMI and try to refinance under PMI:
    I just confirmed with a friend of mine (did two mortgages with him) – they can not do refinance under HARP if you have PMI. You have to go ONLY through your servicer/lender. Please keep us informed if you get some information regarding refinance with PMI. I hope in September administration will come up with some better ideas taking into account that home sales at their lowest number (today’s number).

  • Oleg,

    Thank you for looking into this. There are times I want to be wrong and PMI HARP loans is one of those topics. I’m still hopeful that it will change.

  • Jillian

    My boyfriend qualified for the HARP loan a few months ago and just made his first, “reduced” payment (his interest rate went from 6.735% to 5.75%) as of 8/1/10. The reason he did the HARP loan was because he needed to get his ex-wife off the loan and in his name (he didn’t qualify for an assumption or a straight refinance). Now that’s done. Unfortunately, he’s now on unemployment and his mortgage and assessments are just over $2000/month. His interest rate drop only lowered his mortgage payment from $2000 to $1800 (which is something, but not enough). Unemployment is only $353/week and now his savings is dwindling down.

    Can he qualify for a HAMP loan at this point taking into consideration that he already has done the HARP loan?

    He has excellent credit, no late payments, has PMI, Freddie Mac holds his mortgage, Wells Fargo is his mortgage company, and his townhouse is worth around $185,000 (maybe a bit more/less) and he owes about $223,000.

    Is there anything that he can do, so he doesn’t default?

  • nick

    I m surprised to c the rates. Wells Fargo quoted 3.75% $3,500 closing costs 15 yrs today. The HARP & HAMP reps led me to believe my rate should b between 2-3% with no closing costs using HAMP. I guess I should jump on the deal! Irked by the closings costs since I did a refi 4 years ago. And the gov’t has given them 25 billion $$$.. Any way to get lower rate & reduced closing costs? Or Apply for HAMP @ 2.5% w 40 yr amortization, but make regular full payments. Has anyone received 2′ish % rates from a HAMP program?

  • Jillian,

    The only option you boyfriend has is to apply for a modification. I don’t know if he’ll qualify but it’s his only option.

  • Nick,

    Although you may get a modification without paying fees and at a lower rate, don’t make the mistake of choosing which path you want to take by the benefit you may posess. A HARP refinance is a true refinance where if the client and property qualify, it doens’t negatively impact your credit and the closing process is straight forward. Modifications have been a large failure for a reason. Most people default HOPING to get a modification. You must show hardship, but too much hardship leads the lender to believe you’re beyond help. Not enough, and you’re denied because you don’t NEED the help and qualify to refinance. In my opinion, they’re not similar enough to be compared because their purposes is different. Homeowners are expected to apply for a refinance/HARP. If they don’t qualify, try HAMP. If they don’t qualify for HAMP, try a HAFA short sale. If that doesn’t work, they go into foreclosure. That’s the path they expect homeowners to take.

  • Oleg

    Keane,

    May I add to your response to Jillian’s boyfriend? Do not start HAMP under any circumstances WHEN and/or IF you are unemployed and collecting unemployment benefits. You will definitely be denied because it does not count as stable and consistent income.
    Even if you had stable income, to qualify for HAMP will be a real hassle (with destroyed credit) – imagine yourself playing lottery where you have at most 5% probability to win (at least by the last stats from BofA).

  • Jillian

    The issue with his unemployment is that he’s a union carpenter, so when there’s work, he works, and when there’s no work, he applies/collects unemployment. If he works at least two days a week, then he doesn’t qualify for unemployment, but the weeks he only works once a week or none at all, he collects unemployment. He doesn’t have any issues paying his bills currently, but with his job it’s very unpredictable. The issue is that his mortgage is just so high and since he’s upside down on his mortgage, he couldn’t even sell if he tried.

    We’re just looking for options to get his mortgage payment lowered. We were under the impression that under the HARP loan, it would lower his interest rate and have a larger impact on his monthly payment, but that was not the case. When we asked the mortgage consultant why it only took $200 off per month, she said that they couldn’t offer the current market rate due to the fact that this is a government program and you can’t get the full benefits of someone doing a straight refinance (as far as interest rates are concerned).

    He definitely can show hardship, but also show that he does bring in some form of income on a monthly basis. Some months it may be a lot due to work and some may be less due to unemployment. We’re just trying to find out what options we have available and it seems like everytime you talk to a mortgage consultant they still have no idea what their company offers or what the program is about…

  • Randy

    I applied for a HAMP modification thru Wells Fargo. Although I am current on my mortgage, and have never had a late payment in over 20 yrs.,I met all of the qualifications. I was sent a form letter declining my modification. No one from Wells Fargo will even return my calls to answer any questions. Now I hear that my credit rating will drop 100-150 points just because I applied for this program?? I believe Wells Fargo had no intention to help with this program. Just a waste of time!!

  • Randy,

    Did they put you on the trial payments?

  • Randy

    No, I was not on trial payments. I never got any further than the form letter that said “default not imminent” I sent Wells Fargo all the info requested, including my tax returns. I explained prior to applying that my mortgage was current,I have never had a late payment, and a credit score near 800.(My debt to income was 56%) I can’t even get my Wells Fargo personal rep to even return my phone calls. Like I stated above, I hear that my credit rating will drop 100+ points just because I applied for HAMP??

  • Randy,

    Whether or not it has impacted your credit it to be determined. I’ve seen it impact scores and I’ve seen it not. You’ll have to pull your credit to find out.

  • Homeowners with PMI on their loans are having a hard time refinancing under HARP. Please sign this petition to help!

    http://www.ipetitions.com/petition/harploans/

  • Jim

    Can you do multiple refinances under HARP? I refinanced over a year ago under HARP and rates have dropped quite a bit. Can I do a second HARP refinance?

  • Jasmine

    Keane,

    Can you offer guidance? In Aug of ‘09 I was in the middle of a HARP refi with Taylor, Bean, and Whitaker. I am underwater on my mortgage by about 70K. I was approved, but Taylor Bean went out of business days prior to me signing the papers. My mort was then passed off to Cenlar, and for some reason, they do not offer the HARP. If you are currently with a bank that offers HARP, it’s a “no doc” loan where they give you the fixed rate, no question, no underwriting. But because my bank went out of business, and Cenlar did not offer the HARP, I had to seek outside banking to get the HARP completed. Outside banks require auto underwriting standards set by the govt. My debt to income borders around 50%. I was denied based on this due to auto underwriting. I don’t qualify for HAMP as I am not delinquent! What can I do? The HARP expires in June and my debt to income won’t be much better by then. I have never paid anything late…just have a lot of debt at the moment, but can afford it all AND my mortgage. I only want a fixed rate. My mortgage is an ARM and if rates go up, I will not be able to afford it in the future, which was why I wanted the HARP, to get a fixed rate and pay both principal and interest. My loan was a Freddie Mac! I don’t want to lose my house. I make good money and the mortgage is only in my name. Thus, I can not use my husband’s income on the HARP applications. Obviously, his income assists with the mortgage and expenses. I can’t do the HARP or the HAMP. In fact, Cenlar sold my mortgage to Ocwen after I applied for the HAMP as a last resort (Cenlar stated they offered the HAMP, but as soon as I applied, sold it off to Ocwen). Ocwen stated unless I became delinquent, they couldn’t help me because I have too much “purchasing power”! The kicker is that the HAMP only looks at your housing debt to determine the debt to income ratio, where the HARP looks at all your debt! Why can’t it be consistent across both? I feel I am getting the short end of the stick because my mortgage company went out of business. I was days away from signing and then, poof! They were gone. I am a solid citizen who pays my bills on time and always have…and I could still lose my house. It isn’t fair. I only want a fixed rate. No money out, no nothing. Just a fixed rate. It seems simple, but it’s anything but simple. The HARP expires in June, and then I am screwed for good if I don’t get approved.

  • Moe

    HARP REFINANCE SUCCESSFUL AND COMPLETE AS OF TODAY!!!! Despite the fact that i had applied for and been denied HAMP Modification.

    Woo Hoo!!!

    New loan at 5.125%, not bad considering I have a 1.23% LTV!

    Just wanted to post a follow up like i promised. This is at least 1 example of a successful HARP after having applied for and been denied HAMP!

    Good luck to everyone else.

    If you have any questions, post here or email me at mndk101@yahoo.com, especially if you are dealing with Wells Fargo. I now know more than i care to about their process, I may be able to provide some advice.

  • Moe,

    Great job! I’m glad it worked out for you. Handled properly, they really aren’t that tough. Spread the word and let other homeowners know before this program expires this June.

  • Jasmine,

    In one post, you’ve emcompassed so many flaws with HARP. However, not all still apply.

    Once a loan has been sold to a new servicer, the “No-Doc” version of HARP you speak of no longer exists. It must be with the ORIGINAL servicer for that version of HARP to exist. I’ve never heard that it exists for Freddie Mac loans but it definitely exists for Fannie Mae loans. I also heard that loans where servicing is sold requires the HARP loan to be done with the automated underwriting.

    The good news, Freddie Mac recently changed their guidelines to allow you to add your married spouse! I know values have dropped, but this fixes the income-to-debt ratio. Hopefully that fixes your problem.

  • Jasmine

    Keane,

    Thank you for the information. I guess its more of the auto underwriting that gets me. I am trying to get my credit picture as good as possible prior to the program expiring in June. For the recent Freddie Mac change in allowing to add the spouse income- I am guessing that my spouses debts would also be encompassed?

  • Jamine,

    That is correct but even if your income and debt were identical, remember that you two are SHARING the payment for the mortgage. It will likely help assuming your spouse’s credit is similar to yours.

  • Jasmine

    Keane,

    Thanks for the information; I did confirm that my husband’s income can be used in the FHLMC Open Access application; however, here is outstanding issue- maybe you can help; Since I have to go to an outside back as my current lender does not offer HARP- only HAMP which I don’t qualify for…the outside banks I have spoken with only allow 105% LTV for outside customers. I need that 120% allowed by Freddie Mac to get the refi done….who can I go to that allows over 105% for outside applicants?

  • Jasmine,

    You’re correct that most lenders won’t support up to 125%. What state are you in? I can try to find a lender for you.

  • Jasmine

    Keane,

    I live in Illinois. I have since found out that 5/3 will go up to 125%. Do you know of any other banks? Is the underwriting consistent across the lenders- or would a larger bank have less restrictions, or vice versa? I thought it was automatic so it was the same for everyone, but 5/3 once told me “if they can’t get it approved, then no one will be able to”….indicating they would have a higher success rate for some reason.

  • Jasmine,

    It’s a pretty bold statement by 53rd Bank but I tend to agree when we speak of your situation. Most lenders do not lend over 105% loan-to-value unless the loan is already serviced by that lender.

    Of course, I may sound bias because I work with 53rd Bank which is how I help people finance up to 125% but that relationship was created FOR that purpose, not prior. They were the only lender I could find that would finance above 105%, so I worked with my company to get 53rd as a partnered lender.

    If you didn’t find anybody, I was actually going to see if 53rd did financing in your state and see if I could find a broker who could work with you but since you found them yourself, I think you’re good to go.

    Fannie Mae and Freddie Mac set guidelines that allows ALL lenders who sell to them to lend up to 125% but most will not go that high. 53rd isn’t the most aggressive HARP lender for all situations but they are aggressive for this situation. For instance, they won’t lend over 95% for a condo on HARP where other lenders will go to 105%. It all depends on the situation. They also do not implement the price caps that Fannie Mae and Freddie Mac have, making their pricing for rental properties not very good compared to their competitors.

    All said and done, every lender has their niche. Working with a mortgage company that has multiple lenders to work with will improve your odds of getting a good loan. I do feel 53rd is the best option I know of for your situation.

    Good luck!

  • Ashley

    I could really use some guidance here! My husband and I applied for the Harp through our lender, GMAC. Our LTV ratio is 115%, we have never missed a payment, and we have a Fannie Mae loan. We went through the process and it came back denied. The loan officer told us that the LTV ratio was too high, even though it wasn’t above 125%. We do have PMI, so I’m assuming that is probably the real reason for the denial. We don’t qualify for the HAMP, so I’m at a loss as to what to do next. Can I try to go to another lender for the refi or would that just be a waste of time? Our main goal for wanting our mortgage payment lowered is because we would like to move to a larger home due to our growing family. We can’t sell, so we thought renting our home may be an option. But unless we can get our mortgage payment lowered, we would be in the hole $500 per month based on what we could rent for. Any ideas?

  • Ashley,

    Converting the property to a rental is probably what’s killing your PMI renewal.

    You can convert a property to a rental on HARP but the PMI company has to re-issue the policy. They also may limit the loan-to-value also.

    Find out who your PMI company is (call GMAC to find out) and ask them what their restrictions are. If they’re willing to re-issue the PMI and let you go to 115%, then I would push harder on GMAC to do your refinance.

  • Ashley

    Hi Keane,

    We haven’t converted our home to a rental yet. We were just thinking that may be an option for us, but we haven’t taken it any further.

    I have called GMAC several times and everyone tells me the same thing. That they have to get an approval from their automated system to move forward and since ours was denied, they can’t do anything about it. It’s very frustrating and I’m not sure what else to do.

  • Ashley,

    Was your loan always with GMAC? Do you know if the loan is backed by Fannie Mae or Freddie Mac?

  • Ashley

    When we first got our loan, we had 2 loans, a 5 year ARM with America’s Service Company and a 30 year fixed with Countrywide. We refinanced in Feb 07 to get rid of our ARM and lower our interest rate. That’s when we obtained our loan through GMAC. GMAC told me that our loan is backed by Fannie Mae.

  • Ashley,

    Ask your GMAC rep for a copy of your DU findings.

    Make sure they’re entering your address correctly. Check your address for Fannie eligibility at http://www.fanniemae.com/loanlookup. If they don’t enter the address correctly, it won’t say it’s eligible.

  • Ashley

    Keane,

    You may have been right! I just called GMAC and spoke to another loan officer. He said that our address was entered in correctly, but we have a unit # attached to our town home because it’s technically considered a condo. For some reason the Fannie Mae Underwriting system said it doesn’t recognize the address as a Fannie Mae loan even though we know it is. He is going to look into this and get back to me. Hopefully this will be just what we need to correct the problem and get the refinance!!

  • Ashley,

    This happens all the time with Fannie Mae loans on Condos and Townhomes. The Fannie Mae lookup tool leaves too many variables, so you have to research and research. The Freddie Mac tool works much better because they require you to enter basic data in many cells.

    Look up your original loan documents and see how the address was entered there. Try every possible variation you can think of in the Fannie Mae site. Once you find the address that works, have the lender use THAT address when running the file through DU. I’m sure that’s the problem.

  • Ashley

    So here is what’s really strange. The address they have is correct and it works on the Fannie Mae Look up tool. But for some reason, it is coming back saying we are ineligible because we don’t have a Fannie Mae loan. I called Fannie Mae about it and they told me that GMAC needs to call their POC at Fannie Mae and see if they can get it worked out.

  • Jasmine

    Keane,
    If I am not able to refi with HARP prior to the program expiration date this coming June, my only option will be to pay down enough prinicap on my own so that I can eventually refi the old fashioned way…my question is this: I have two mortgages. My house has lost 70K in value. Let’s assume the value does not come back at all in the next 6 years (worse case scenerio). In 6 years, if I have paid off 45K in principal- my first mortgage would reflect equity. With the second added in, it would still not. Would i be able to refi the “old fashioned way”? Or do they combine both mortages? I know the second would be willing to subordinate. So first mort balance 245K. 2nd mort balance 48K. Approx house value, 270K. Would I be able to refi?

  • Jasmine,

    FHA used to allow 2nd mortgages above the value of your home but not anymore. Conventional loans do not allow the combined loans to exceed 95%.

    Why can’t you do a HARP loan? Your equity actually sounds fine. Many lenders will lend up to 105% of the 1st mortgage with no limit on the 2nd.

  • Jasmine

    Keane,

    for whatever reason, my debt to income ratio was borderline and i didn’t get approved with the automatic underwriting that I had to deal with for the open access refi doc. But to clarify, I would only want to refi my first mortgage. Are you saying that they have to combine both mortgages with a “regular” refi? I know I fit within all guidelines of the HARP…you had told me to add my husband in and that should help the debt to income. That is what we plan to do, but I am trying to plan for worse case scenerio.

  • Jasmine,

    Is your 2nd mortgage a home-equity-line-of-credit? Some lenders will use the payment reporting on your credit report. Others will use 1% of the line limit. If your lender is using the latter of the two, it’s harder to get approved. Finding a lender who will use the actualy payment can help.

    There’s many tricks to help. Maybe I should write a blog on this.

  • Jasmine

    No, its not a line of credit. Just a 2nd mortgage….

  • Find out how much lower your debt needs to be. Email me if you want me to evaluate and see if I can help with this.

  • Lisa

    Keane, I have friends who appplied for HARP through Wells Fargo’s 3-step Refinance System for Wells Fargo customers only. Their credit scores were at and above 760 and they are current in their mortgage payments. They applied for a 15 year loan with an interest rate of 4.25% and were denied. They are now concerned that this denial will affect their credit scores. Will it?

  • i have been denied a HAMP because my monthly expenses are not high enought. however, they did not use car payments, minimum credit card payments, natural gas, electricity, medical, dental, life insurance, car insurance, groceries, entertainment costs in calculating monthly expenses.

    WHAT MONTYLY EXPENSES ARE LEGAL TO CLAIM WHEN APPLYING FOR A HAMP MODIFICATION???

  • Robert,

    They primarily check to see if you have the income to cover the mortgage payment.

    Call them back and ask for a loan officer and see if you’re eligible for a HARP refinance, not a modification. That may go through.

  • Jasmine

    Robert, The HAMP only looks at your mortgage expense, while the HARP looks at everything! Its not apples to apples and I have no idea why. It doesn’t seem right.

  • Jasmine

    Keane,

    Have you heard any updated news on if they will extend the HARP Expiration date of June 2011 to extend through 2012 like the HAMP?

  • Jasmine,

    That’s correct. Some versions of HARP don’t look at income at all. They just verify that you have made your payments on time.

    I haven’t heard anything about HARP being extended through 2012.

  • Jasmine

    A question to all out there: Has anyone been approved for a HARP refinance that is also in a Debt consolidation program (credit counseling, etc)? I am not certain how debt consolidation affects your credit score and if the automatic underwriting guidelines would take that into account…any thoughts would be appreciated! Thanks!

  • Jasmine,

    It depends on how this reflects on your credit. If the consolidation program has caused you to miss payments, getting a HARP loan will be more difficult. There’s a version of HARP that only the existing lender can do that doesn’t check credit, only your payment history. If you qualify for that program, your consolidation program will not be considered.

  • Jasmine

    The program has not caused us to miss payments. Its actually my husband that entered into the program. He is not on the mortgage, but per your advice, I wanted to add him on when we apply for the HARP because overall, the combined debt to income is lower with him on the loan. My concern is his credit score or how the debt consolidation program will impact his score. Our current lender does not offer the HARP, only the HAMP, so an outside bank would have to run credit, but my understanding was it was still automatic underwriting so I am not sure what that entails. What I may do is have my mortgage person run my credit and debt to income on my own and his as well and then have them advise me on if we should apply together or just on my own based on how the scores and ratios look. Does that sound like a solid game plan? At the time, he entered the program because the HARP did not allow your spouse and we figured his credit wouldn’t matter, but obviously the guidelines have since changed….thanks.

  • Jasmine,

    I can’t answer for HAMP but for HARP, your loan officer should be able to try both ways. If one doesn’t work, he can try the other. It’s not a program where you have one chance to get it right. The loan officer can package up the file either way that works and submit accordingly.

  • First of all, thanks for the wealth of information you are providing on this subject. On my primary (and only) residence I have a 1st mortgage and a 2nd mortgage which is a HELOC. The combined balance on the loans is almost exactly what the county values my property at, and based on researching recent sales I think an appraisal would come out to approx. the same amount. What I need to be able to do is refinance both loans into a single 15 year fixed loan. Refinancing the HELOC is particularly important because the HELOC is adjustable rate which will wipe me out if interest rates rise. Credit score is high, never a late payment, and income shouldn’t be an issue. The person I normally work with has told me that I probably have no chance, I was wondering if you knew of a way. Thanks again.

  • Ram

    Hi

    After 5 months of processing today I got the call from the bank saying that my loan modification is approved. Below is my state and the offer from the bank. It would be great if you could help me on some questions.

    Current Home value: 210k
    Mortgage: With Fannie Mac, 260k, 30yr fixed, 6.125%.
    Second Mortgage: None. (as I put 20% down)
    PMI: None
    DTI: 27%
    Primary home: Yes, so far.
    Late payment: Past 3 months. Bank said it started the foreclosure process on May 12th.

    Modification Offer: (not sure if it is HAMP or something else)
    - 4.125% and 40yr Fixed
    - 3 month interest added to the loan
    - Tax and Insurance becomes part of monthly payment to bank
    - Foreclosure Attorney Fee of $1500 included into the loan

    Overall this looks something I could afford. But below are my concern/question.
    1. Will I be able to rent out after loan modification? will it it have any impact?
    2. Why would they include the attorney fee of $1500 when there is nothing done from them? Can I ask them to reduce or remove that?
    3. I am not sure if I will be able to cover the cost with the rent which I will get. Is there scope of bargain here to reduce the payment further?

    Please let me know your thoughts.
    Thanks
    Ram

  • Ram,

    That’s a good offer! I’m not sure why they’re charging the attorney fee but that’s outside my realm of expertise. The added loan to the balance is normal. Adding taxes and insurance is also normal. The loan terms may require you to occupy the home. If you later decide to rent but only after time and some changed circumstances, it should be okay but if you have an intent to rent now and do so soon after the modification, there may some recourse by your lender.

    I would discuss your offer with an attorney.

  • Carmen

    My main loan is with Wells Fargo. I qualify for Harp – my loan is with Fannie Mac. Wells fargo states that I do not qualify for harp because my home is considered a condo and condo no longer qualify for HARP. The problem that exists with my loan with wells is that the county has my home classified as a condo and wells has it as a single fam. residence. There was obviously a data entry error with wells. I originally started the harp process in January 2011 and made it all the way to the “president’s # and was told today that even with their error in data entry, I am not eligible for the harp due to he condo status. I have to go the route of a conventional loan. My credit score is in the low 600′s and I can’t refi. Any suggestions??

  • Keane

    Condos are eligible for HARP. I think they may not be clear in their communication. If
    uou want a 2nd opinion from someone at Wells,email me and I can connect you.

  • bogart

    I just recently heard about the HARP modification.My current lender is BANK OF AMERICA.My wife was not technically laid off but her hours has been reduced to 32 instead of the 40 hours a week for over a year now.Because of this I missed one mortgage payment last year. I called my lender to seek for any assistance.They send me some forms to fill out for modification but i never send it back and made my loan back to current to the present.Our credit score is good.Do you think we can be eligible with the HARP? Please advise.

  • bogart

    I just recently heard about the HARP modification.My current lender is BANK OF AMERICA.My wife was not technically laid off but her hours has been reduced to 32 instead of the 40 hours a week for over a year now.Because of this I missed one mortgage payment last year. I called my lender to seek for any assistance.They send me some forms to fill out for modification but i never send it back and made my loan back to current to the present.Our credit score is good.Do you think we can be eligible with the HARP? Please advise. THANKS

  • Keane

    Do you want your voice heard? I have a writer for the Wall Street Journal who’s looking for homeowners to interview. Please email me if you’re interested. Thanks

  • Melody

    Keane

    thank you for your website. I have learned more from you than my lender. Navy Federal Credit Union. My question is this: We applied for a HAMP loan before HARP was even available and after 13 months were turned down. We were never told why. We then applied for HARP when the program came out and were told by our servicer that we would need $12K to close. We obviously said no and then tried to do the HAMP again. When we applied (again through our servicer) we were told we would have to let our payments go in arrears. We said no thank you as we did not want to ruin our credit. Well now this week we contacted an outside lender, they ran all of the numbers and everything looked great but then Fannie Mae said our loan was inelegible. Do I have any recourse at this point? I am assuming it is because we had applied for both programs before. Any help is appreciated.
    thank you!

  • Melody,

    When you applied for your HAMP modification, did you do a trial payment where your payment was reduced? This is where many people lose their eligibility.

    Also, Fannie Mae may have said you’re ineligible due to overall risk. The outside lender would have ran your file through Fannie Mae’s underwriting engine (Desktop Underwriter or DU). Ask for a copy of your DU findings. Feel free to email them to me for a second opinion if you like.

  • Tracy

    Thanks for your website- so much to understand. I’m a real estate professional so I may have a better understanding of some of these topics but am finding myself lost at sea with regard to my own home refinance. WE have excellent credit, decent income, moderate debt, perfect payment history and have applied for HARP modification and through DU we appear to qualify. My problem is my HELOC. We originally used it for purchase money (in CA) but refinanced it about 7 years ago at a 10 year adjustable but locked it for 7 years about 4 years ago. We have a balloon pymt due in 3 years. WE owe $321k on the 1st and $167k on the HELOC with the home at about a $450k value. I would like to refinance under HARP as we are currently proceeding but my real goal is to do something with the HELOC to turn it in to a 30 year fixed product at a decent rate. They won’t talk to me at PNC Bank – ‘that department doesn’t exist.’ I’ve heard of other people getting their HELOC Bank to lock them in since it could prevent a short sale or foreclosure but I’m not behind on my payments. Should I have gone for HAMP? Is that the only way to get refinanced on the HELOC 2nd? I’m going to be borderline for HARP and almost hope that they deny me so I can pursue HAMP. WHAT CAN I DO TO NEGOTIATE WITH MY HELOC BANK SO THEY’LL LOCK ME IN TO A STABLE PRODUCT FOR THE LOAN AND I WON’T HAVE TO WORRY ABOUT MY BALLOON PAYMENT?
    I really appreciate the help if you have it!

  • Keane

    Tracy,

    You won’t have much luck with your current servicer but since you have good credit, I would explore more options in the private sector. Some banks are still lending to 90% on 2nd position loans. This doesn’t cover your whole balance but its a start. You can then apply for an unsecured loan for the other difference plus use cash reserves if needed.

    Also, FHA may allow you to finance near 100% of the value to pay off the 2nd if its a “rate/term” refinance”. The only thing you’ll have to check is what the FHA loan limit is for your area.

  • Dee

    Hi,

    I am trying to refinance through HARP. I went with my current lender. They required an appraisal. The appraiser thought I might have foundation damage. My lender is now demanding that I pay for a foundation inspection and correct any damage. This seems to be defeating the purpose of HARP, which is to allow borrowers to free up money, which I can’t do if I have to borrow additional money to fix the foundation. Can the lender require you to fix things like that? It seems pathetic that they are going to keep me from refinancing because I don’t have the money for foundation repair.

  • Jasmine

    Dee, Beginning March (may be delayed until April), new guidelines are supposed to be announced that allows you to get the HARP without an appraisal. At least, this is what my lender is telling me.

  • Jim

    Kenae – Thanks so much for this informative blog. I just started the process of applying for a HAMP via Wells Fargo. After reading all the information with so many horror stories, I’m not sure if it was the right move.

    My company downsized and my job as Assistant Director was eliminated late in November of 2008. We have struggled through with unemployment insurance, savings, and now some pensions and early SS. I also reinvented myself and became a licensed RE agent in NY, but the income so far is as expected, much lower.

    My plan is to try to make full payments if I even get to the trial period and decide to take it. I’m hoping that will not impact my good credit score too badly. After all the paperwork that has been submitted to WF and a BPO that WF says they will schedule, if I do not qualify I’m going to be pretty ticked. I’ve had many other dealings with WF with clients’ mortgage financing and I don’t have too much good to say. My point of contact at Wells through this process does, however seem to be pretty good. I guess time will tell. I will keep you all posted with anything I learn.

    Thanks again!

  • Jim

    Sorry – should have reviewed before posting. I meant to type KEANE (I’ve been typo-dislexic lately). :-)

  • Jim,

    No worries. My name isn’t an easy one to remember :)

    All programs have been modified and improved, so hopefully yours is soon. Under your circumstances, you’re much better off trying the HAMP first (due to the lower income).

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