HARP 2 Refinance

[NevadaHelp]

Freddie Mac loan with BofA as servicer. Property was originally owner occupied and is now tenant occupied. Spoke with loan officer at BofA and was told that I qualify for Harp 2 refinance, but "pricing" is bad. Interest rate would go from 6.5% to 5.25% and require $4200 at closing. Total savings on monthly payment is almost $300 per month. BofA said they are locking rates for 90 days because it is taking them so long to close. I have contacted another big bank and was told that Freddie Mac requires that you refinance through your current servicer/lender. Feeling like Harp 2 is just another way for BofA to charge fees.

1) Does anyone know of lenders/servicers refinancing BofA loans under Harp 2?
2) If so, is it possible to get normal "pricing" (i.e. lower interest rate with little or nothing due at closing)?

[Evan Bedard]

1) Does anyone know of lenders/servicers refinancing BofA loans under Harp 2?
2) If so, is it possible to get normal "pricing" (i.e. lower interest rate with little or nothing due at closing)?

Yes only Fannie Mae and Freddie Mac-backed mortgages can qualify for this program and from my understanding you can various lenders for the refi.. Closing may still be about a couple thousand but you should definitely be able to score an interest rate closer to today's market rates..

[arlensc]

I have looked into HARP 2 and have found no luck. 7 banks I talked with all have put their own rules on HARP 2. All of them created their own LTV limits (125-135 LTV) and those willing to give me a rate were 1 - 2 point over base. 4.8 and higher. Very frustrating! B of A was not one of those I contacted. I boycotted B of A years ago due to their policies.

Good luck

[Evan Bedard]

I suggest contacting a member here by the name of Erik Sandstrom, he knows all the ins and outs of HARP and may be able to steer you in the right direction.. You can find his information in the thread below..

http://www.loansafe.org/forum/refina...-L7Mspz-2yaDhQ

[Erik Sandstrom]

Arlensc & NevadaHelp,
What state are you in? We are able to do: AZ, CA, CO, FL, ID, MN, NV, NM, OK, OR, TX, UT, VT, WA & WI.

If you're outside of those states I may have someone to at least point you in the right direction. My contact information is below. Thanks Evan for giving him heads up, I appreciate that.

[Dedondees]

I too am a NV homeowner looking to refinance under HARP 2. I called my lender US Bank. To my surprise they immediately offered me a refi for 4.875% for 30 years. My current loan is at 6.25% for 30 years of which I have 24 years left, I have credit in the 780's but my LTV is around 160% . The 4.875% is a little higher than I would like, but it doesn't look like people are getting the advertised low rates for HARP. Should I shop around more or just jump on this?

One other HARP related question I have is that I swear I saw some article saying that after you refi with HARP the only mortgage interest you can write off on your taxes is the portion of your loan that is equal to the assessed value of your home. So if you had a $200,000 HARP Refi, and your home is worth only $100,000, then you can only deduct the interest on the $100,000. Did I perhaps misread something about deducting points instead? I can't seem to find any reference to this anywhere, so perhaps I was mistaken (I hope I was).

[Erik Sandstrom]

Since the release of HARP 2 this week I have learned many things about the new program, positives and negatives as well as how to overcome some of the negatives. I'll be sharing many of my thoughts and feedback regarding the program as soon as I have a free moment.

Freddie Mac's tricky system has added many overlays and the system is very risk oriented.

Appraisal waivers are coming back much more often as well as the approvals of previous denials under HARP 1.

What many forum members need to understand about the interest rates they're being quoted is over the past week interest rates have went up about 1/2 a point as I predicted. So if you're being quoted something that's a bit higher than what you've heard normally this is why. The bond has increased drastically and is slowly going back down. Interest rates can change multiple times in just one day. This is something that I saw a mile away before the program came out and was able to secure lower rates for the majority of my clients.

If you don't take the rate you're being offered you're chancing them either going up or maybe going back down. We never know what will really happen, my prediction is the bond will go back down it's just going to be a matter of time. Something I'm able to offer my clients is what's called a "Float" where we can lock the rate now and if it goes down by at least 1/4 of a point, we're able to get that without incurring any additional cost.

[Erik Sandstrom]

Dedondees - welcome to the forum!!
I havent heard anything about the HARP refinance restricting what you're able to claim on your taxes. I would really doubt that's true and hope for all homeowners sakes it's not.

[Kim in AR]

Dedondees, I read something similar to that as well.

"The interest on any portion of credit greater than the fair market value of your property is not tax deductible for Federal income tax purposes. You should consult your tax advisor regarding the tax deductibility of interest and charges." - from the fine print at the bottom of the page https://www.wellsfargo.com/homeassist/refinance

[Dedondees]

Dedondees, I read something similar to that as well.

"The interest on any portion of credit greater than the fair market value of your property is not tax deductible for Federal income tax purposes. You should consult your tax advisor regarding the tax deductibility of interest and charges." - from the fine print at the bottom of the page https://www.wellsfargo.com/homeassist/refinance

Yes! That is the exact language that I read. Thanks for posting that link. If that is the case, if I refinance, I will lose about $200 in tax credits per month, making the net monthly savings for me around $100, as opposed to around $300. So my break even point would be more than 10 months.

I looked on the IRS website in the section about mortgage debt. So I guess the question is, when you refi under this HARP, since the underwater portion is now secured (or guaranteed to the lender) by the federal government, and not the value of your house is that why it is no longer deductible?

http://www.irs.gov/publications/p936/ar02.html#en_US_2011_publink1000229894

"Figure A. Is My Home Mortgage Interest Fully Deductible?




Secured Debt



You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:

• Makes your ownership in a qualified home security for payment of the debt,
• Provides, in case of default, that your home could satisfy the debt, and
• Is recorded or is otherwise perfected under any state or local law that applies.

In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. In this publication, mortgage will refer to secured debt.
Debt not secured by home. A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). A debt is not secured by your home if it once was, but is no longer secured by your home."

[codyhayes]

I have my doubts (practically speaking) that the IRS will be able to enforce any non-deductible portion of mortgage interest paid on a yearly basis.

Say for example, you owe 200k on your house, but market value (not determined by field appraisal in most cases) at the time of the HARP 2.0 Refinance is 100k. Does that mean that the mortgage interest deduction for the first year is 50% of the total interest paid? What if your home increased in value throughout the tax year? Are we now going to require homes to be appraised at the end of each calendar year to determine what portion of the interest paid for the year is deductible? No. Not going to happen.

Alternatively, is the mortgage servicer going to issue a 1098T which shows some amount other than the total mortgage interest paid under the note? No, it will not. Is the Mortgage servicer going to send a "current market-value report" each year together with the 1098T so that individuals can accurately report the correct mortgage interest deduction? No, probably not.

The concept that HARP 2.0 Mortgage Interest is not tax deductible for amounts of indebtedness in excess of market-value might make sense in the tax context, but I have a hard time seeing how this provision will be enforced.

Thoughts anyone?

-Cody Hayes, President
Mortgage Advisory Services, Phoenix AZ
Get Independent Mortgage Advice - Find out if your loan is fair!
602-373-8485 direct

[codyhayes]

PS - Here is a link to IRS Publication 936 discussing the Home Mortgage Interest Deduction. It appears that the home mortgage interest deduction has always contained provisions concerning market-value limitations on the tax-deductible nature of home mortgage interest. It appears that HARP 2.0 transactions may simply bring to light a portion of the tax code which has always applied and may apply to home loan borrowers involved in these transactions.

Call the IRS, your tax advisor, or tax attorney for advice. The information you read on this page is not legal advice, tax advice, or advice at all. This page is commentary for informational and educational purposes only. Do not rely on the information contained herein for any purpose, specially to make decisions.

-Cody Hayes, President
Mortgage Advisory Services, Phoenix AZ
Get Independent Mortgage Advice - Find out if your loan is fair!
602-373-8485 direct[/QUOTE]

I have my doubts (practically speaking) that the IRS will be able to enforce any non-deductible portion of mortgage interest paid on a yearly basis.

Say for example, you owe 200k on your house, but market value (not determined by field appraisal in most cases) at the time of the HARP 2.0 Refinance is 100k. Does that mean that the mortgage interest deduction for the first year is 50% of the total interest paid? What if your home increased in value throughout the tax year? Are we now going to require homes to be appraised at the end of each calendar year to determine what portion of the interest paid for the year is deductible? No. Not going to happen.

Alternatively, is the mortgage servicer going to issue a 1098T which shows some amount other than the total mortgage interest paid under the note? No, it will not. Is the Mortgage servicer going to send a "current market-value report" each year together with the 1098T so that individuals can accurately report the correct mortgage interest deduction? No, probably not.

The concept that HARP 2.0 Mortgage Interest is not tax deductible for amounts of indebtedness in excess of market-value might make sense in the tax context, but I have a hard time seeing how this provision will be enforced.

Thoughts anyone?

-Cody Hayes, President
Mortgage Advisory Services, Phoenix AZ
Get Independent Mortgage Advice - Find out if your loan is fair!
602-373-8485 direct