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HARP Refinances May Get Easier in 2013

By: | January 9th, 2013

The Home Affordable Refinance Program, also known as HARP, is available for underwater borrowers to obtain throughout 2013. This program has been in effect since 2009, although its popularity did not gain traction until 2012 when it was updated to eliminate loan to value caps. Although HARP 2.0 has been successful, there are many eligible homeowners that were denied approval. These borrowers, as well as those who never applied for HARP, may find that obtaining HARP refinances may get easier in 2013 for several reasons.

As of this writing, this is the last year that the HARP program will be available. There is no doubt that lenders have seen large profits through the HARP loan program. As this year progresses, lenders may very well want to take advantage of bringing in as many HARP refinances as possible before the opportunity ends. Since many have overlays on the program, we may begin to see some flexibility as the year progresses.

With this in mind, many homeowners have weathered the storm and may no longer be underwater. Home values have been on the increase for most of 2012 and are expected to continue this upward trend. As values increase, a homeowner’s equity in the property also increases which is pulling many out from underwater. Although HARP does not have maximum loan to value caps, it does have a minimum of 80%. For many homeowners who were on the borderline of being underwater, any increase in equity may put them under the required minimum LTV and make it necessary for these borrowers to use regular mortgage refinancing options. With less homeowners needing HARP, lenders will be more willing to offer the program to those that remain underwater and HARP eligible, even those with extremely high LTVs.

Another reason that HARP may get easier this year is that the Federal Housing Finance Agency (FHFA) put into effect January 1, 2013 a new representation and warranty framework for all Fannie Mae and Freddie Mac Loans, including HARP refinances. Under the new representation and warranty framework, which lessens a lender’s burden when a loan defaults, HARP loans are eligible after twelve months from the date of Fannie Mae or Freddie Mac purchase. During that time, the two GSEs will also be performing quality control checks. Hopefully these new rules will entice lenders to be more flexible with overlays and approvals.

This is an important year for underwater homeowners who want to refinance. To be eligible for a HARP loan, the original loan must have been sold to Fannie Mae or Freddie Mac prior to June 1, 2009. The HARP program offers homeowners the opportunity to save money on a monthly basis or reduce the term of the loan or, in some cases, do both. It is also a way to gain back equity in the home at a faster pace. For some homeowners who have never applied for HARP, it is time to do so now. For those who have been turned down for HARP, it is time to try again and look for a different lender to take the application. For more information about HARP or HARP lenders, the online form is available for this purpose and will return a response almost instantly.

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