Refi after credit charge off?

[Eagle777]

Does anyone know if we can do a Harp 2.0 refi with a charge off on credit?

[Evan Bedard]

Here is some information from Fannie Mae on the credit history requirements for HARP.

https://www.efanniemae.com/sf/mha/mh...inancefaqs.pdf

How should a borrower’s credit history be evaluated?

For DU Refi Plus, DU performs its standard credit risk assessment for DU Refi Plus loans, which includes a comprehensive review of the borrower’s credit history. Fannie Mae's standard minimum credit score requirement is waived, however.
Lenders will receive the limited waiver of representations and warranties for eligible DU loan casefiles, provided the lender has complied with all other requirements as documented in the Selling Guide.

For Refi Plus (manual underwriting), the assessment of the borrower’s credit history varies depending on the increase in the monthly principal and interest payment:

Payment Not Increasing More Than 20% – Lenders should rely primarily on the paymenthistory requirements of the existing mortgage, and the borrower benefit requirements. Thlender must determine that the borrower has not had any 30-day mortgage delinquenon the existing mortgage in the most recent 6-month period, and no more than one 30-day delinquency in months 7 – 12. Aside from these requirements, the lender will not be required to represent and warrant that the borrower has an acceptable credit history or beheld accountable for undisclosed liabilities in connection with a Refi Plus loan. The lender is not required to obtain a credit report but must obtain a representative credit score forpurposes as long as the new mortgage file includes documented proof from the lender’s servicing system (printed after the date of the borrower’s new mortgage application) that evidences payment history requirements for the mortgage have been met.

Payment Increasing More Than 20% – In addition to relying on the payment history and borrower benefit requirement, the lender must re-qualify the borrower for the mortgage, including income and asset documentation, a maximum DTI ratio, and a minimum credscore. Refer to the Selling Guide for complete requirements.

[Erik Sandstrom]

Thanks Evan,
Those are the same servicer guidelines and I'm sure will be very helpful to some members. Certain homeowners have servicers that do not originate HARP loans and I always recommend getting in touch with a couple people when you're looking to refinance. You want to work with the person you feel most comfortable with.

Eagle to answer your question outside of the same servicer level in regards to a charge off on the credit it really will depend on what type of debt was charged off. The automated underwriting would determine whether or not that debt can be omitted or if it would need to be paid off prior to closing the new loan. This is the same for both refinances and purchases, sometimes I get lucky and am able to still fund a loan with a debt in collection or charged off.