HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans


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HARP 2.0 Frequently Asked Questions

HARP has been expanded to help more homeowners qualify for refinancing their

Louisville Kentucky Mortgage Loans

 – even those with little or no equity available.

With HARP you could take advantage of low interest rates and other refinancing benefits even if the value of your home has declined and you owe more than your home is worth.

The questions and answers below will help you better understand how this program can help you refinance your underwater mortgage:

  • What does it mean to Refinance my Louisville Kentucky Mortgage Loan?When you refinance your mortgage, you are applying for a new mortgage, which replaces your current home loan.
  • What does it mean to be upside down on my mortgage?The terms “Upside Down”or “Underwater” simply mean that you owe more on your home loan than your property may appraise or sell for.The percentage that you are upside down is factored into what’s called a Loan-to-Value(LTV) ratio. So, if you owe $125,000 on a property that is valued at $100,000, then your LTV would be 125%.With the new updates to the HARP 2.0 program, borrowers with an LTV ratio greater than 125% may now qualify for a new refinance, provided they meet the other criteria.
  • What is the difference between a refinance and a loan modification?Basically, a modification is a change to an existing loan, where a refinance is a new loan.A Refinance on your loan means that you get a new loan to pay off an existing mortgage.A modification is for borrowers who are behind on their mortgage payment, or struggling to remain current, and are either not eligible for a refinance or it will not help them maintain their payments.
  • What changes were made to HARP that may make me eligible now?There were several changes to HARP, but the primary enhancement removed the limit on the amount that homeowners could be underwater (owe more on their mortgage than their home is worth). With that change, many homeowners who were not eligible will now qualify.The amount a borrower owes on a mortgage compared to the appraised value of a property is called Loan-to-Value (LTV).With the release of “HARP 2.0” guidelines, the original 125% LTV Cap was lifted, which will essentially allow borrowers who owe more than 125% on their first mortgage the ability to qualify for a new refinance, provided they meet the other underwriting and program criteria.
  • Is HARP the only refinance program available for underwater homeowners?HARP is one of several refinancing options available to eligible homeowners. However, HARP is unique because it is the primary refinance program that enables eligible borrowers with little to no equity in their homes to take advantage of low interest rates and other refinancing benefits.Making Home Affordable is a trademark of the United States Department of the Treasury.
  • How can I find out whether my loan is owned by Fannie Mae or Freddie Mac?Only mortgages owned or guaranteed by either Fannie Mae or Freddie Mac are eligible for refinance under the enhanced and expanded provisions of HARP. You can confirm that your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:http://fanniemae.com/loanlookup/ 
    http://freddiemac.com/mymortgage
  • Who is Fannie Mae?Fannie Mae is a government-chartered company with a mission to provide a stable source of funding to the U.S. housing and mortgage markets.The company purchases and securitizes mortgage loans to ensure that money is consistently available to financial institutions that lend money to home buyers.
  • What is the difference between a lender and a servicer?Your mortgage lender is the financial institution that gave you your mortgage loan.Your servicer is the financial institution that you send your monthly payment to. Your servicer is responsible for collecting your payments and crediting your account.You can find your mortgage servicer contact information on your monthly statement or coupon book.
  • On The Fannie Mae loan lookup tool, what does “Match Found” mean?A “Match Found” response to your search in the Fannie Mae Loan Lookup means that Fannie Mae owns a loan at the address entered in the search, however, it does not guarantee or imply that you will qualify for a Fannie Mae loan refinance or loan modification.
  • My loan is owned by Fannie, but it says that I don’t qualify for HARP?This is because Fannie Mae needed to receive your loan on May 31, 2009 or before.
  • Does Fannie Mae own my first and second mortgage?Fannie Mae generally owns primary (first-lien) mortgages only. A “Match Found” on the Fannie Mae Loan Lookup Tool means that they own the primary mortgage on the address entered in the search field.To find out who owns your second mortgage, refer to your monthly mortgage statement or contact the mortgage servicer to whom you send your monthly payment to.
  • What if I have an adjustable-rate mortgage (ARM)?HARP allows you to replace your adjustable-rate mortgage and many homeowners opt for a more stable fixed-rate mortgage.Every adjustable-rate mortgage is different, but refinancing may still provide you with a lower monthly payment, and allow you to avoid the sometimes large payment increase that comes once your ARM initial rate ends. The stability of a fixed monthly payment will give you security in knowing what you’ll owe every month.
  • Will the lender require an appraisal with a new HARP loan?Maybe – Even though the new updates to this program are intended to give borrowers with a Loan-to-Value (LTV) ratio above 125% the ability to refinance, lenders will still run an online valuation or require a full appraisal.Fannie Mae and Freddie Mac are updating their systems as this program progresses, but a good rule-of-thumb to follow is that loans under 125% LTV will generally not have an appraisal.If the appraisal is not conducted because of what is called PIW (Property Inspection Waiver), there will still be a $75 fees paid to Fannie Mae. Irrespective of what the appraisal value comes out to be, the loan would go through. However, some lenders may still cap the LTV to 150% – 200% or more, mainly depending on how the market reacts to this new program. Basically, expect LTV, Appraisal and Lending Limits to vary between lenders, and the time of the month.
  • Do I have to refinance through my current lender?No – As of March 19, 2012, Fannie Mae and Freddie Mac have opened this program up to non-servicing mortgage lenders.This is a huge benefit to borrowers in the fact that you have an opportunity to find a bank or mortgage broker who specializes in the new HARP program and can offer competitive rates.
  • Am I eligible for a refinance if my current loan has mortgage insurance (MI)?Yes, and the good news is that most of the mortgage insurance companies are working with HARP lenders to make the process as seamless as possible.Your new lender will do the work to make sure your current mortgage insurance scenario is similar to what you were, or were not paying.
  • Will I have to pay MI with a HARP since my new LTV will be >80%?No – If you did not originally have mortgage insurance due to the fact that your original LTV was less than 80% when acquired that loan, you will not be required to have MI, even though your new Loan-to-Value ratio will be greater than 80%.
  • I did not put 20% down when I purchased my property, but I do not have MI?If your current loan at the time of closing was over 80% and you are not paying a monthly Mortgage Insurance, most likely you have a Lender Paid Mortgage Insurance (LPMI).And yes, you would be able to refinance if you have an LPMI. Your lender will simply need to transfer the same coverage level from your current MI company to the new HARP 2.0 Refinance.
  • Can I Combine My First And Second Mortgage Into The New HARP Refinance?No – HARP does not allow for cash-out refinances or combining a first and second.Your new lender will order a subordination from your current second mortgage holder, which may require a fee.To quote the guidelines: “The refinance will not have a cash-out component, except for closing costs and certain de minimis allowances to cover items such as association fees, property tax bills, insurance costs, and rounding adjustments.
  • Will the lender need to verify income, assets and employment?Fannie Mae doesn’t expressly ask for Income, Employment or Asset verification for HARP 2.0 Loans. But, Fannie Mae suggests that the lender must obtain a verbal verification of employment (VOE) and verify the borrower’ss source of non-employment income, plus obtain any other income documentation as required by the Underwriting Findings Report.The borrower’s ability to repay the mortgage loan is based primarily on the acceptable payment history of the existing mortgage and the borrower benefit provisions. The acceptable payment history is no late in last 6 months and no more than one 30 days late in 7-12 months.If the borrower’s principal and interest payment is increasing more than 20%, the borrower must be re-qualified for the new loan, including verification of all income sources and amounts, and verification of any assets needed to close.Basically, your new lender will run your application through an online Fannie Mae or Freddie Mac approval engine, which will then provide a list of necessary documentation you need to prepare for loan submission.
  • Can I qualify for a new loan on an investment property or second home?All occupancy types i.e. Primary Residence, Second Homes and Investment Properties are allowed with HARP, even if the occupancy type has changed since the time of the original loan.Aliquam porttitor metus felis. Curabitur euismod porta justo ut mattis. Mauris condimentum ultrices justo, ac suscipit leo tempor eget
  • Are All Borrowers on the existing mortgage required to be on the new loan?Borrower(s) may be removed through the new transaction, provided that:a) The lender obtains documented evidence that the remaining borrower has been making payments from his or her own funds for the past 12 months, andb) The borrower(s) being removed is also removed from the deed.If the borrower(s) is being removed due to death, however, evidence that the remaining borrower(s) has been making payments from his or her own funds is not required.
Joel Lobb (NMLS#57916)

HARP REFINANCE QUESTIONS?

HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans

You can determine whether your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:

http://www.fanniemae.com/loanlookup/
http://www.freddiemac.com/mymortgage

Fannie Mae and Freddie Mac have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Fannie Mae or Freddie Mac, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

We Are Not The Government. All approvals and rates are not guaranteed, and are only issued based on standard HARP or other mortgage qualifying guidelines.  Equal Opportunity Lending, Fair Credit, Truth in Lending, and their own local and state RESPA, or otherwise lending laws. Privacy Statement | Equal Housing

Making Home Affordable is a trademark of the United States Department of the Treasury.

Call us at 502-905-3708 today, or CLICK HERE to apply online.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
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Louisville Kentucky VA Mortgage and home loan Program Quick Reference


VA Program Quick Reference Terms 15 & 30 Year Fixed

Loan Amount Max Purchase = $1,500,000 max Refinance = limited to the max LTV of the property value on the appraisal

. To calculate max loan amount (and guaranty), visit http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

Max LTV/CLTV Purchase & IRRRL = 100%/100% Cash-Out Refinance = 90%/90% (based on appraised value)

Min. Credit Score 620 up to $417,000, 640 for Interest Rate Reduction Refis 720 for $417,000-$650,000 740 for loan amounts > $650,000 Borrower Eligibility Veterans who served on active duty after 9/15/40 and who were honorably discharged /released from active duty.

Occupancy Owner occupied by veteran and/or spouse. Ratios 29%/41% – ratios may be exceeded with acceptable AUS and underwriter’s approval. Transaction Types Purchase, Interest Rate Reduction Refinance & Cash-Out Refinance Income Documentation Full/Alt Residual Income Refer to Residual Income Table in VA Guidelines for specific requirement, Chapter VII. Assets Less than or = $417,000 None required $417,000 – $650,000 6 months PITI Greater than $650,000 12 months PITI Property Types SFR, 2-4 units, PUDs & VA-approved Condos Appraisal IRRRL: 2055 or full appraisal by VA-approved appraiser Purchase & Cash-Out: Full appraisal by VA-approved appraiser Loan amounts > $650,000: Require full appraisal by VA-approved appraiser and field review

. Energy Efficient Mortgage Up to $6,000 of the loan proceeds may be used to reimburse the veteran for the cost of energy efficient improvements. Funding Fees Refer to the Funding Fee Table in VA Guidelines, Chapter XII. Seller Concessions Limited to 4% maximum

Why Are More Kentucky Mortgage Loans Not Being Refinanced?


 

Kentucky Mortgage Rates at all time low..Call now for a free-analysis 502-905-3708

 

Why Are More Kentucky Mortgage Loans Not Being Refinanced?

Why Are More Kentucky Mortgage Loans Not Being Refinanced?October 25, 2010

While mortgage interest rates are at their lowest levels since 1945, millions of mortgages that carry interest rates of 6% to 9% or even higher, are not being refinanced. The reasons for this involve Fannie Mae and Freddie Mac, the two secondary market giants now in Government conservatorships, in a central role.
The problem is perhaps best seen through the eyes of borrowers who are unable to refinance. Each unsuccessful borrower cited below is representative of a sizeable group of unsuccessful borrowers.

Fannie Mae and Freddie Mac Have Become Excessively Restrictive

 

 

Adam was turned down for a refinance because he did not meet the new stiffer underwriting and pricing requirements set by the agencies in their standard programs. His credit score, which was acceptable when he got his loan before the crisis, is not high enough to meet the new requirements.
It clearly was appropriate for the agencies to correct the excessively liberal rules that had prevailed during the go-go years, which contributed to the financial crisis. However, they have reacted to their excessive liberality before the crisis by becoming excessively restrictive in the aftermath. Their underwriting and pricing structures are designed to maximize their net earnings, as if they were still private firms.

Fannie and Freddie are now part of the Government, and should set their underwriting rules and pricing adjustments not to maximize net revenue but to break-even over a long time horizon.

Kentucky Mortgage Loans

 

There Should Be No Maximum LTV on the HARP Program
Barbara is one of many homeowners who bought during the go-go years and who now owe more than their houses are worth – she is “underwater”. She applied for a loan under the Home Affordable Refinance Program (HARP), which was designed to make refinance possible for underwater borrowers who are current on their payments and whose loans are owned by Fannie or Freddie. Barbara is ineligible, however, because she is too far underwater. Her loan-to-value ratio (LTV)  is 130% and the agencies have set a 125% maximum.
A maximum LTV in the HARP programs cuts out a sizeable segment of the potential market, for no good reason. The agencies are already on the hook for any losses on high LTV loans, and a rate reduction can only reduce the probability that a default will occur that would trigger the loss. Indeed, the reduction in expected loss from a rate-reducing refinance is larger on a 150% LTV than on a 125% LTV. The default rate has to fall only half as much on a 150% loan as on a 125% loan to generate the same reduction in expected loss.

Fannie and Freddie should scrap the LTV maximum in the HARP program, for which there is no rational reason, thereby also eliminating the need for appraisals on HARP loans.

Kentucky Mortgage Loans

Too Few Lenders Make 125% HARP Loans

Charley was turned down for a refinance under the HARP program, although his LTV was only 120%, which made him eligible under agency rules. Nonetheless, the lenders Charley approached would not make the loan. They told him that their maximum LTV was 105%, and some said that it was 95%. Charley could have refinanced if he knew where to go, but he didn’t and gave up the search.
I did a quick and dirty survey and found that HARP loans above 105% are not available from brokers or from smaller lenders who sell to wholesalers who in turn sell to the agencies. HARP loans exceeding 105% are only available from some of the lenders who sell directly to the agencies.
Freddie Mac has a list of HARP lenders at http://www.freddiemac.com/cgi-bin/homeowners/relief_refi.cgi, but it is extremely difficult to find. If Fannie has one, I could not find it. The Freddie list has 27 lenders, 14 of which do 125% loans, of which only 4 have wide multi-state presence:

Fannie and Freddie ought to do a better job of informing potential borrowers how to find a lender who will make 125% HARP loans, and they should review their policies that have discouraged broader lender participation.

 

Borrowers With LTVs Above 105% Who Have PMI Can Refinance Only With Their Current Servicer
Doris’s situation was the same as Charley’s, including an LTV of 120%,  with one difference. Doris’s existing loan carries privarw mortgage insurance (PMI). The lenders who turned her down told her that the mortgage insurer had to agree to shift the MI policy to the new loan, but would not do so in her case.
Under HARP rules, if there is no MI on the existing loan, none is required on the new loan. If there was MI on the old loan, as in Doris’s case, it will be carried forward on the new loan, provided the PMI firm agrees. But if the current LTV exceeds 105%, they won’t agree unless the new loan is being made by the existing servicer.
Doris was not aware that only the lender servicing her loan can shift the mortgage insurance policy from the existing loan to a new one. PMIs will not shift the mortgage insurance to a new loan with a different lender when the LTV exceeds 105%.

Fannie and Freddie ought to inform potential HARP borrowers who have mortgage insurance and LTVs greater than 105% that they can only refinance with their current lender, and they should examine whether there is anything they can do to remove the PMI roadblock.

 

Kentucky Mortgage Loans

HARP Should Be Expanded to Cover Mortgages Not Owned by Fannie or Freddie
Ethan is an underwater borrower in good standing whose loan is not owned by Fannie or Freddie. His only possibility of a refinance is the new FHA program I wrote about a few weeks ago, but that program requires the existing lender to write-down the balance to 97.75% of house value. Since Ethan is making timely payments, the lender has very little incentive to do that.
Ethan had no say in who ended up owning his loan, from his perspective it was a coin toss that came up tails and made him ineligible for HARP. The out-of-luck group to which Ethan belongs includes a large number of sub-prime borrowers who meet their obligations faithfully while paying rates up to 9% and even higher.
There is no good reason why such borrowers have to be left entirely out in the cold. While including these borrowers in HARP would expose Fannie and Freddie to risks they did not have before, the agencies could set payment performance requirements and charge risk premiums large enough to protect taxpayers while still offering many of these borrowers substantial relief..

 

Treasury should have the agencies develop a HARP1 program covering loans they do not now own that would be subject to underwriting rules and price adjustments consistent with the Government breaking even.

 


Kentucky Mortgage Loans

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