Is my current mortgage eligible for the HARP refinance program?
If I refinanced on or after June 1, 2009 am I eligible for HARP 2.0?
No. If the existing loan was not acquired by Fannie Mae before June 1, 2009, it is ineligible for HARP 2.0. In March 2011, the initial cutoff date of March 1, 2009, was extended by three months to June 1, 2009, and this revised deadline is still in effect.
If I am currently in a modification program can I apply for HARP?
In general, if you meet the requirements for a modification program such as HAMP, you will not be eligible for HARP 2.0. A modification program is intended for homeowners who cannot meet their current mortgage payments and are at risk of foreclosure. HARP, on the other hand, is intended for homeowners who have not been able to refinance at lower interest rates because of their homes’ falling values. However, some struggling borrowers may have entered HAMP on a trial basis in anticipation of greater hardship or default. If their circumstances have since improved and the HAMP trial modification was resolved, and they meet the current eligibility requirements, they may be able to refinance through HARP.
My home is currently listed for sale. Can I still apply for HARP?
Yes. Although Fannie Mae policy prohibits the refinancing of homes that are currently listed on the market, this policy can be waived for Refi Plus transactions (manual or DU).
Can I combine my second mortgage into the refinance?
No, the second mortgage may not be combined with the first mortgage into the new refinance. No HARP refinance may include a cash-out component, except for closing costs and allowances on certain amounts such as insurance costs, property tax bills and association fees.
Is a loan in an inter vivos revocable trust eligible?
Yes, if the existing loan was originally closed in the borrowers’ names and was then transferred to an inter vivos (i.e. living) revocable trust, the loan is still Refi Plus-eligible. The only allowed parties to the trust are the borrowers on the existing loan. See Fannie Mae’s guidelines to make sure the trust abides by all standard requirements.
Can I resubordinate my second mortgage?
Yes. Resubordination can be done as part of a DU Refi Plus transaction, as long as it is not used to pay off the second loan or acquire new subordinate financing.
Should I use HARP 2.0 or HAMP?
The Home Affordable Refinance Program (HARP) is intended for those homeowners whose homes have lost value, and therefore have not been able to refinance at low mortgage rates. On the other hand, the Home Affordable Modification Program (HAMP) targets borrowers who are in default or dangerously close to defaulting by helping them to avoid foreclosure. To be eligible for a HARP refinance under Refi Plus, the borrower must:
- demonstrate an ability to meet their monthly loan payments and be current on the existing mortgage
- have no record of delinquency over the last six months, and no more than one 30-day delinquency over the last 12-month period.
To be eligible for a modification through HAMP, meanwhile, the borrower must be able to show that a financial hardship exists and that the borrower’s liquid assets are insufficient for making monthly payments on the existing loan.
Do all existing borrowers need to be on the new loan?
Existing borrowers may be removed from the new loan on a Refi Plus transaction, for any reason, as long as the following conditions are met:
- the lender can demonstrate that the borrowers who remain on the loan have made loan payments over the past 12 months from their own funds; and
- the borrower to be removed from the loan is also removed from the deed.
In cases of a borrower who is deceased, proper documentation concerning the borrower’s death must be included in the Refi Plus file. Even in these cases, the lender is still required to demonstrate that the remaining borrower(s) have continued making payments. For a DU Refi Plus transaction, existing borrowers may be removed from the new loan under the same conditions as above. However, in the case of removing deceased borrowers, there is no need to prove that the remaining borrower(s) have been making loan payments from their own funds.
What types of loan does a HARP refinance allow me to get?
A HARP refinance allows you to readjust your loan to a more stable product. The following examples demonstrate some of the most common refinance transactions under HARP:
- Refinancing a mortgage loan that includes an interest-only provision into a fully amortizing mortgage (that is, a mortgage that includes amortization of principal as well as equity accumulation)
- Refinancing an adjustable-rate mortgage (ARM) into a fixed-rate mortgage (FRM), and thus preventing the possibility of payment shock
- Refinancing an existing ARM into a new ARM that has a fixed introductory period that lasts five years or longer and is no less than than that of the existing mortgage, thus preventing the oncoming payment shock and extending the initial rate period
- Refinancing a 30-year FRM into a new FRM with a shorter term, such as 25, 20 or 15 years (to build equity and allow for quicker amortization of principal).
Extending the term of the mortgage in itself (for example, making a 30-year FRM into a 40-year FRM) cannot be considered a refinance into a more stable product, unless the borrower’s mortgage payment is also reduced.
Do high-cost area loans and jumbo loans qualify?
Yes, mortgages in high-cost areas and jumbo mortgages do qualify for Refi Plus refinance. These loans can be delivered through a high-balance loan option. All current loan limits apply. The “permanent” limits on high-balance loans apply to any Refi Plus loan whose note is dated October 1, 2011 or later (as the “temporary” limits on these loans expired on September 30).
What if I have a subprime or Alt-A loan?
An existing subprime or Alt-A loan that is backed by Fannie Mae can qualify for refinance through DU Refi Plus, but not through Refi Plus manual underwriting. Your may wish to contact lender to have them provide you with other refinance options if your loan is a subprime or Alt-A loan and thus does not qualify through Refi Plus.
Do I have to use my current lender with HARP 2.0?
If you are applying for a DU Refi Plus loan (HARP 2.0), you may choose any lender you wish or select the existing servicer to originate it. (This flexibility is due to the fact that DU automatically determines if the investor on the existing loan is Fannie Mae, even if you don’t use your current lender.) On the other hand, manually underwritten Refi Plus loans have more limits and can only be originated by the server of the existing loan.
How does my lender calculate payment increases on an ARM or pick a payment loan?
If the ARM is in its initial-rate period, the lender will compare the new principal and interest with the ARM’s initial rate. However, if the ARM is in its adjusted-rate period, then the lender will compare them using that adjusted rate. If the loan comes with multiple payment options (such as negative amortization), the seller should go by the lowest payment option in order to see if the increase will be greater than 20%.
Are balloon loans and ARMs eligible?
Balloon loans and adjustable-rate mortgages (ARMs) that have a convertibility option are eligible for refinance under DU Refi Plus and Refi Plus, but only if they meet one of the following conditions:
- the borrower has not elected to make a conditional right to refinance in the case of a balloon loan, nor exercised the conversion option in the case of an ARM; or
- the borrower has elected the conditional right to refinance or the conversion option, and had the loan redelivered to Fannie Mae before June 1, 2009.
If the lender repurchased the loan as part of the conversion or refinance option, then Fannie Mae is no longer considered to be the owner of the loan. Unless it was redelivered before June 1, 2009, the loan is ineligible for refinance under Refi Plus or DU Refi Plus.
What if my mortgage is not with Fannie Mae or Freddie Mac?
If your loan is not held by either Fannie Mae or Freddie Mac there may be other programs still available to you. If you would like to speak with a counselor about available programs, call the Homeowner’s HOPE Hotline 1-888-995-HOPE (4673). The Homeowner’s HOPE Hotline offers free HUD-certified counseling services and is available 24/7 in English and Spanish. Other languages are available by appointment.