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HARP 2.0 Throws a Life Preserver to Underwater D.C. Homeowners

By: Morris Newman | September 21st, 2012

Mortgage applications were up 11.1% for the week ending September 12 from the previous seven-day period, according to the Mortgage Bankers Association (MBA). Refinancing remains the most popular type of home loan by far, with “refis” representing four out of five requests for new home loans, according to the same source.

One of the most popular forms of refinancing is HARP 2.0, a unique form of refinance made available from the bank regulator that oversees Fannie Mae and Freddie Mac. The special feature of HARP 2.0 is that borrowers are able to refinance a home that is under water, i.e. when homeowners owe more on the mortgage than the home is currently worth. Many underwater home owners would be unable to refinance without HARP 2.0, because most lenders will not refinance a mortgage for more than the home is worth. That’s one reason why underwater home owners are considered to be at-risk of losing their homes—or walking away from them.

HARP 2.0 is a way of keeping home owners in their houses, with affordable interest terms. For qualifying, good-credit home owners who are current on their home payments, HARP 2.0 enables home owners to refinance for more than 100% of the home’s appraised value. Many borrowers, in fact, refinance for more than 125% of the loan-to-value (LTV). The Federal Home Finance Agency (FHFA) has described HARP 2.0 as one of the federal government’s efforts to throw a “life preserver” to home owners who are underwater, but have still managed to stay current on payments within the past 12 months.

To qualify, the loan to be refinanced must be owned by Fannie Mae or Freddie Mac, the federally chartered “super agencies that buy the majority of home loans in the country. Not all lenders offer HARP 2.0., however, so some research may be necessary. The average home owner will save about $250 monthly with this refinance. For many working families, that difference could turn a mortgage that’s too expensive into one that’s affordable.
Low interest rates account may likely for some of the popularity of HARP 2.0 loans. Borrowers can also choose among current low-interest loan types, such as 30 year and 15 year loans.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7-1.0% point origination fee.


Latest HARP Mortgage News April 16th, 2014