Friday, August 24, 2012

Trying to Get a HARP Refi


Since we got shut out of a no closing costs refi from our bank, and the bank did not suggest any other type of refi, I next had the brilliant idea to try for a HARP (Home Affordable Refinance Program) loan.
HARP is a loan program of the federal government that is only available to people whose loans are owned by Fannie Mae or Freddie Mac. The idea is to help homeowners under pressure stay in their homes and not go into default. There's a convenient government website where you can read all the details, and a link to look up your loan and see if either company does. Most mortgage loans get sold to one of these companies. (The bank that sends you a mortgage bill every month merely services the loan; it does not own the loan.)

Here’s the beginning of the HARP website info:

“If you're not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through MHA's Home Affordable Refinance Program (HARP). HARP is designed to help you get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply.”

The website explains exactly what circumstances qualify for a HARP loan,

You may be eligible for HARP if you meet all of the following criteria:
  • 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.

The beauty of the HARP loan is that you don't have to be underwater on your home to qualify. As long as your home value has dropped beyond a certain point, and thus your loan-to-value ratio has gotten over 80%, you can get a HARP loan. You won’t have to pay PMI (private mortgage insurance) if you don’t already. Even though your loan-to-value ratio has changed because your home's value has declined, you don’t get penalized with PMI and you get a lower mortgage rate that will save you hundreds every month and many thousands over the life of your loan. This is a very good deal.

Sounds wonderful. Now try to find a HARP loan. Not so easy. Lots of banks don’t offer them. Make that LOTS and LOTS and LOTS of banks don’t offer them. Internet banks claim they do, but then they want enormous closing costs, and you certainly are not paying that wonderful 3.5% we hear about in the media. You’re paying a lot more. Or they want you to sign up for free trials of other services. What’s up with that? And just who are these Internet lenders, anyway? Getting a HARP loan would be a lot easier on my nerves if I could go to a bricks-and-mortar bank to do it. So far, I have drawn a blank despite following the HARP website's bank locator for my state. Sigh.

Why is this wonderful government HARP deal so hard to access? I’ve started calling banks again, and the loan officers are all too busy to talk to me, so they must have plenty of business with straight refi loans. A HARP loan is a better deal for the customer, so of course they don’t offer them.

But I persist.    

1 comment:

Hopeful Lily said...

I've deleted a couple of commercial spam comments. One claims that a refi is just another way of trying to get a free modification from your bank. This is not true. You pay for the refi with very substantial fees. These are usually rolled into the loan. That's why, after a refi, you now owe more on your house than you did before, even though the interest rate is less.

Meanwhile, the bank that does the refi sells your loan to another company, usually Fannie Mae or Freddie Mac. The refi fees and the servicing of your loan are so profitable that they are what your bank wants, not ownership of your loan per se.