Home Value has fallen? You can still refinance

by Tom Tousignant

in Blog, Mortgages, Refinancing

If your mortgage is owned by Fannie Mae or Freddie Mac.  For most people, they have no idea who owns their mortgage – all they know is the servicer.  The Servicer of your mortgage is the bank that you send your check to each month.  They collect the escrow payments, chase down late payments, and send the owner of the mortgage their check each month.  Fannie Mae and Freddie Mac own most conventional mortgages in the US.  (Over $6 Trillion worth).

The Federal Housing Finance Agency has extended the government’s Home Affordable Refinance Program by 12 months.

HARP’s new end date is June 30, 2011.

Making Home Affordable logo

Originally known as Making Home Affordable, HARP aims to help North Carolina homeowners refinance their mortgage who may otherwise be ineligible because of falling home values.

There are 4 basic HARP criteria every borrower must meet:

  1. The existing home loan must be guaranteed by Fannie Mae or Freddie Mac.
  2. Your home must be a 1- to 4-unit property
  3. You must have a perfect mortgage payment history going back 12 months. No 30-day lates allowed.
  4. Your first mortgage balance must be 125% or less of your home’s market value

If you’re not sure whether Fannie Mae or Freddie Mac back your mortgage, you can look it up. Fannie’s website is http://www.fanniemae.com/loanlookup; Freddie’s is http://freddiemac.com/mymortgage.  If you don’t locate your loan on either website, your mortgage is backed by a third-party and is not HARP-eligible.

For homeowners that meet HARP’s criteria, there are some underwriting details of which to be aware.

First, if your original mortgage does not require mortgage insurance, your HARP mortgage will not require it, either — regardless of your new loan-to-value.

Second, all HARP refinances require income verification. It doesn’t matter if your original mortgage was a stated income or no income verification loan. You should expect to produce 1040s and W-2s for your HARP refinance and asset statements, too.

And, lastly, second (and third) mortgages may not be “rolled in” to a new first mortgage loan balance. Junior lien holders must agree to remain in a junior lien position, regardless of combined loan-to-value.

There is a thorough HARP FAQ section on the government’s website, but it’s for general questions only. For specific Home Affordable Refinance Program information, first make sure you’re program-eligible, then pick up the phone to call your loan officer.

While this program hasn’t been too successful nationally, we have helped many, many homeowners in the Charlotte area over the past year with this program.  If the resources listed in the post aren’t enough to get you started, feel free to give us a call for more answers.

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