Is HARP 3 on the horizon?

[Erik Sandstrom]

If you owe more than your home is worth, there may just be something on the horizon that can help. We all know there is loan modifications, HARP refinances and internal bank programs that have been able to help homeowners that are upside down. Many of these programs are structured around people that are having difficulty paying their mortgage. BESIDES the HARP program, that basically is a program designed for homeowners that make their payments on time, have a reasonable overall debt ratio (Mortgage, liabilities...etc), and of course MUST BE BACKED BY FANNIE MAE & FREDDIE MAC. I have a strong feeling that that will CHANGE and I promised everyone that I would mention it when I felt it was time.

Many, many people have been wondering if there will be a program that can help our Non Fannie Mae & Freddie Mac clients. I have mentioned that if HARP 3 will come, I believe it would happen before the election. I have been preaching HARP 3 for quite some time and as a much needed program to help the struggling homeowners that owe more than their home is worth.

Bernanke has come out and spoken regarding the current position of our US Economy and federal reserve. The words that came out of his mouth "I want to do whatever it takes" stunned me! I didn't know what to expect as previous announcements have not always been positive or accurate. Now the only problem is that HARP 3 would be an extremely large scale purchase plan of assets, are they ready for that? That's the one thing that I have to step back and consider. This could be it! I've had gut feelings before and they usually come to fruition, as we get closer to QE3 (as long as it's not delayed) I will update our members with the news and of course if you have any questions please feel free to ask.

[justcindy]

I hope they do something for us who are not with Freddie/Fannie .... I am 70K underwater (Massachusetts), lost my job after 30 years, and when I DO find a new job, I can't see putting any more money into this mortgage!! Thanks Erik!

[ahdelta18]

*Fingers Crossed* We've been the red-headed stepchild for the entire duration of this whole debacle

[Roccie]

Erik, When Harp 3, we all hope, hits the street, how much will PMI have an impact on processing us through? Thanks for the insight and continued quest to keep us informed.

[TimeDivided]

Fingers Crossed! We're non fanny/freddy and stuck in limbo, and drooling at these intrest rates!

Watchin this issue (and this thread) like a hawk!

[judithcalifornia]

I've been working with a lender since April, trying to refi under Harp 2. Lender waiting for Harp 3 because of my LTV. Hoping this works.

[Tee-Dub]

I wonder what about those of us that are with Fannie, but are being denied due to not being approved by the DU system? We have a "credit enhancement" on our loan, placed by Fannie on our original, and according to Fannie this disqualifies us. I hope we don't fall through the cracks since we have a Fannie backed loan, even though Fannie wont approve a HARP 2.0.

[TimeDivided]

Totally bummed, I was hoping this would be it for us. Back to the drawing board.

[Cat Damiano]

Totally bummed, I was hoping this would be it for us. Back to the drawing board.

I am sorry it may not be able to workout for your loan type, let's let Erik update his own thread as the information unfolds. Maybe there will be a last minute reprieve that will help those that are unable to currently refi under HARP.

[Erik Sandstrom]

I've been working with a lender since April, trying to refi under Harp 2. Lender waiting for Harp 3 because of my LTV. Hoping this works.

Judith,
Why are you waiting for HARP 3 because of your current loan to value? HARP is unlimited loan to value with only very few lenders, us being one of them. Most lenders are capped out at 150%, 125%, 105%...not us!

I would be happy to discuss the details with you.

**Still hoping they will allow HARP 3 to non-Fannie/Freddie backed clients stuck in 6.5% interest rates or higher. There are many people that are in need of HARP, some of which have Fannie/Freddie backed loans but don't qualify due to automated underwriting feeback.**

[Johnny S]

I'm really hoping HARP 3 goes through and soon, we need it! My home is almost $100K underwater with a current LTV of 160% and I'm caught in a 9% subprime ARM that is going into it's second adjuststment, luckily the rate hasn't increased in both adjustments but my floor on the ARM is 9% so I'm still stuck with a nasty monthly payment as compared to where I could be with a normal product. Fannie/Freddie don't back our loan and it's owned by Duetche Bank so I have zero ability to refi under any current programs. Our income is decent, not great but decent and our DTI is about 28% because we're smart on how we spend, don't use credit unless we need to and we've payed down our prior debts so we wouldn't have that looming in our background.

Our credit is perfect with close to 800 scores for my wife and I but unfortunately our scores didn't get to where they needed to be until about 3 months after everything went spiraling in 2008ish and our house just became underwater at that time which killed any chances of being able to get out of our current product. He were are, 4 years later and still paying double what we should be. I know others are in worse shape than us but this is really hampering our ability to put any money into the bank for retirement to offset what was lost from our 401K's in 2008 and after and additionally making us eternally house poor... All we want is a normal loan and I feel like we'll never get there. It's pretty sad that we've already paid Chase more in interest over the past 7 years than our house is currently worth and we can't even get into a normal loan...

Sorry for the long winded post, just venting and hoping for something good to happen.

[Cat Damiano]

I'm really hoping HARP 3 goes through and soon, we need it! My home is almost $100K underwater with a current LTV of 160% and I'm caught in a 9% subprime ARM that is going into it's second adjuststment, luckily the rate hasn't increased in both adjustments but my floor on the ARM is 9% so I'm still stuck with a nasty monthly payment as compared to where I could be with a normal product. Fannie/Freddie don't back our loan and it's owned by Duetche Bank so I have zero ability to refi under any current programs. Our income is decent, not great but decent and our DTI is about 28% because we're smart on how we spend, don't use credit unless we need to and we've payed down our prior debts so we wouldn't have that looming in our background.

Our credit is perfect with close to 800 scores for my wife and I but unfortunately our scores didn't get to where they needed to be until about 3 months after everything went spiraling in 2008ish and our house just became underwater at that time which killed any chances of being able to get out of our current product. He were are, 4 years later and still paying double what we should be. I know others are in worse shape than us but this is really hampering our ability to put any money into the bank for retirement to offset what was lost from our 401K's in 2008 and after and additionally making us eternally house poor... All we want is a normal loan and I feel like we'll never get there. It's pretty sad that we've already paid Chase more in interest over the past 7 years than our house is currently worth and we can't even get into a normal loan...

Sorry for the long winded post, just venting and hoping for something good to happen.

You can vent here anytime. Many in similar situations are hoping for the same thing and needing it sooner rather than later.

[justcindy]

I hope so too .... I FINALLY got a job starting Nov. 5th. I was lucky enough to keep up on my mortgage during my five months of unemployment. That was a horrible experience and I realize I HAVE to re-fi. I am underwater by 45-70K (condo), with Sovereign Bank. I want to extend it from the 25 years I have left, back to 30, at a rate lower than 5.125%. I will try for an internal mod first, but I hope Obama gets re-elected and we get a shot at these mod programs. If it's Romney, we can all kiss our chances goodbye (unless we have a bank account in Switzerland or the Cayman Islands).

[Annie Mac]

Question for Erik....what is "automated underwriting feedback" which you referred to? This is a term which is new to me, but I have a pretty good hunch I have been experiencing it for four and a half years.

[double.bogey]

Hi Erik,
New to the site, came across this site while searching for some more info for my situation.
My question, I think, simply is this: Is "Harp 3.0" the only potential option for me?
My wife and I are 40-50K under with a ING Direct 5/1 ARM that is adjusting.
I have no problem with the current rate but we just want to lock in to a fixed rate to protect when/if rates rise. A loan modification would be great, but we really just want to refi to lock in.
ING obviously does not work with gov programs and not backed by Fannie/Freddie.

While I'm at it, I've heard ING is merging with Capital One. Will that in any way change their stance or availability on programs like Harp?

Thanks! This forum is awesome!

[Erik Sandstrom]

Question for Erik....what is "automated underwriting feedback" which you referred to? This is a term which is new to me, but I have a pretty good hunch I have been experiencing it for four and a half years.

Hi Annie Mac,
The automated underwriting system is used in many conventional loans as well the Home Affordable Refinance Program (HARP). It determines the borrowers eligibility, looks at the credit report that was imported and shows what items will need to be used to satisfy certain assets...etc. Most of the time it detecs the presence of derogatory items and will also tell you if the debt needs to be paid off prior to funding the new loan.

In HARP circumstances the Automated Underwriting System has a few different levels of feedback: Approve/Eligible, EA-1-3 and Caution for Fannie Mae backed loans. Many people that fell under the expanded approval category are now receiving "Approve/Eligible" feedback from what I have been noticing. We were just able to approve a loan at 390 percent loan to value! There was an update that was released recently which I will be writing an article with the title "HARP Expanded Approval, what does that mean?" Watch out for that, it will explain the different levels of risk associated with these loans and what caused the feedback.

When you receive Expanded Approval feedback that doesn't mean you're not eligible for a HARP refinance, it means the loan would require Manual Underwriting. There are only a few lenders that I know of participating with the Expanded Approval loans. The reason we have not opened that product up to our consumers is because if we were to offer Manual Underwriting the interest rate would be higher, and we would have to give the same interest rate to the borrower with "Approve/Eligible" feedback.

Double.Bogey,
Thanks for joining the forum! I'm always happy to answer any questions you have.

At this time the only program outside of a loan modification, DOJ mod or settlement for underwater borrowers is the Home Affordable Refinance Program. This program right now is only for Fannie Mae & Freddie Mac backed clients however this may be changing sometime in the near future with HARP 3. I'm really pushing for this as I myself am one of the borrowers not able to take advantage of HARP.

I would try contacting them directly and letting them know your position and you may be forced to walk if nothing can be done with the loan adjusting very soon.

Loan modifications also follow a typical waterfall method, first the interest rate is lowered, 2nd the term is extended to no more than 40 years and sometimes they give you a principal forbearance or reduction. The benchmark they need to get to is 31% of the income, if you and your wife average around 3750 per month gross they would modify your loan to: $1162.50 (Principal, Interest, Taxes & Insurance). Now if they can't reach this payment by lowering the interest rate to 2% and extending the term to 40 years you may need more income to qualify. I don't know your whole scenario so I can't tell you exactly what should be done.

I truly believe HARP 3 will come soon and it will back the non-Fannie/Freddie clients and this might be something you want to wait for. If you miss any mortgage payments you may not be eligible for the program. Anytime you have a question feel free to ask. My fastest response time is through e-mail. Best of luck to you and your family.

[mvpolo]

Fingers crossed...it's getting very close to expanding! UPDATE 1-U.S. may expand mortgage refinance program - WSJ | Reuters

[Erik Sandstrom]

Fingers crossed...it's getting very close to expanding! UPDATE 1-U.S. may expand mortgage refinance program - WSJ | Reuters

I've been hearing more and more about HARP 3 being implemented very soon.

As soon as I hear about guidelines I will be updating our Forum members. Great info MvPolo, I read this article the other day and things sound very promising.

[Johnny S]

I've been hearing more and more about HARP 3 being implemented very soon.

As soon as I hear about guidelines I will be updating our Forum members. Great info MvPolo, I read this article the other day and things sound very promising.

My fingers are crossed. Any ideas of what kind of rates we might be looking at? From the article posted by mvpolo the rates will be higher than current market, I just wonder how much higher.

[Erik Sandstrom]

My fingers are crossed. Any ideas of what kind of rates we might be looking at? From the article posted by mvpolo the rates will be higher than current market, I just wonder how much higher.

Hey Johnny,
I would assume the new interest rates will be similar to what HARP is currently offering. Now the interest rates for HARP are not that much higher than a regular conventional refinance and sometimes end up being lower. The reason why it would be lower is because the FICO score does not impact the rate they are eligible for as much as a regular conventional 30 year fixed would.

When the program is released, I would expect the interest rates to be high for a couple months due to a surge in volume that we will see coming.

[jhn_plsn]

Although likely a long shot I must ask if this new program would help those in BK or those who have been discharged already? I know if my payment is adjusted it would effect my CH13 payment, but only for the required time frame. I am looking for a long term solution where I can actually start to dream of retirement again.

[Erik Sandstrom]

Although likely a long shot I must ask if this new program would help those in BK or those who have been discharged already? I know if my payment is adjusted it would effect my CH13 payment, but only for the required time frame. I am looking for a long term solution where I can actually start to dream of retirement again.

Hi Jhn_plsn,
I'm assuming that the new program will follow similar guidelines to a conventional refinance (similar to HARP 1.0-2.0) and would have a seasoning period before the borrower is able to obtain new financing. For example: Chapter 7 requires a 4 year waiting period and Chapter 13 is 2 years.

Currently with HARP I have had some borrowers that had a bankruptcy able to work with their current lenders that have been successful. It's called the "Same Servicer" program, which usually has higher interest rates however it's better than having no option at all.

HARP 3 is coming VERY, VERY soon.

[Johnny S]

HARP 3 is coming VERY, VERY soon.

How soon? I'm getting anxious 9% mortgage needs to go, lol.

[CalOkie]

Any idea how Harp 3.0 would impact my situation? I owe 625k on first, about 125k on second. Would I be able to refi my first? Roll them together into something? Be completely ineligible? What would I be able to do?

[Luckyone]

Anyone know if BofA is going to do more interest rate reductions with out any costs?? that is the best way to go, I think, has anyone got one done ??? please let me know what are the steps to take. thanks

Luckyone

[rseth123]

Anyone know if BofA is going to do more interest rate reductions with out any costs?? that is the best way to go, I think, has anyone got one done ??? please let me know what are the steps to take. thanks

Luckyone

Good Credit, low Income to debt. Loan owned and serviced by Citi, so cannot refinance. Loan is $410K value is $330K

[Erik Sandstrom]

Anyone know if BofA is going to do more interest rate reductions with out any costs?? that is the best way to go, I think, has anyone got one done ??? please let me know what are the steps to take. thanks

Luckyone

Hi Luckyone,
What you're referencing is a "No Cost" loan option where you may receive a higher interest rate but it would provide a credit to you as the borrower to pay for the closing costs. Going this direction will keep your loan balance the same only extend the terms to either 20,25 or 30 years depending on the program you take and will lower the interest rate.

If you're not planning on staying in the home for the next 5 years this would be a direction I would recommend taking. If you ARE planning on staying in the home longer than 5 years you may want to consider either paying for the closing costs out of pocket or financing them into your new loan. You would want to calculate how long it would take to recover from the closing costs and determine your best direction.

When you're working with a loan officer, whether it be myself or someone else - their job is to understand what your goals for the property are. When understanding your goals I would recommend a certain direction that would suit you and your family the best.

I hope whichever direction you decide to take is the best for you and your family and if you ever have any questions feel free to ask.

HARP 3
Everyone - I have been hearing more and more news and it seems we are coming closer to the release of the new program. I have not heard of any specific guidelines yet and will be writing another article soon regarding the release of the program.

[serverdude]

All this talk of HARP 3 becoming a reality is exciting. Here's a couple questions looking for insight and speculation.

I believe that most (many? a lot?) BofA customers who will be helped by HARP 3 ALSO would be helped by the refinance portion of the DOJ Settlement. The DOJ refinance route will NOT give you the best current rates in the world but would certainly be a big improvement and pretty close. (PMMS + 100 basis) Over the life of a loan, let's say 20-30 years, a complete refi at current rates under HARP 3 might be a better option than just a minor mod from the DOJ settlement. So given the choice, what do you think is the best route?

Also, do you think there is some deliberate foot dragging by BofA in hopes that we all just "go away" when HARP 3 comes out?

[mpaterso]

Hello I just jumped over to this board because BofA just told me I'm NOT eligible for interest rate relief under the National Mort Settlement, because even though they still service my jumbo ($472K) first mortgage, they do not own it. Bank of NY does, and they are not a "Participating Investor".

So HARP 3.0 is my only hope for a lower interest rate right now. I own $60K on a second mortgage as well - my home is only worth about $400K.

ERIK - do you think HARP 3.0 will cover jumbos like mine??? I've read conflicting reports. Is there legislation pending, and does it cover jumbos as well?

[Erik Sandstrom]

Hello I just jumped over to this board because BofA just told me I'm NOT eligible for interest rate relief under the National Mort Settlement, because even though they still service my jumbo ($472K) first mortgage, they do not own it. Bank of NY does, and they are not a "Participating Investor".

So HARP 3.0 is my only hope for a lower interest rate right now. I own $60K on a second mortgage as well - my home is only worth about $400K.

ERIK - do you think HARP 3.0 will cover jumbos like mine??? I've read conflicting reports. Is there legislation pending, and does it cover jumbos as well?

Hi Mpaterso,
Welcome to the forum, I would be happy to provide some insight.

At this time we're not exactly sure if they will be implementing a loan limit, there isn't a specific loan limit on HARP 2 at this time however the loan must be backed by Fannie/Freddie and I haven't seen Fannie invest in loans higher than the conforming limit of 417,000.00 unless the property is a 2-4 unit.

That doesn't mean that HARP3 will cap out at 417,000.00 my opinion is that they will open the program up for everyone, even in the jumbo category. This is what I hope for as I have many clients awaiting the release of the program. I have a mailing list established already and will update everyone as I see progress, shoot me an e-mail if you would like to be added to that.

I will also be writing an article regarding the program on LoanSafe to inform our valuable members. Keep checking back for more recent updates.

[racerboy]

Erik-
I already joined your HARP 3 mailing list, but had a question regarding HARP 2 (which I imagine will serve as a tempalte for HARP 3). Am I correct that one of the requirements to to qualify for HARP 2 is that you must have been current on your note for the past year?

Frank

[Erik Sandstrom]

Erik-
I already joined your HARP 3 mailing list, but had a question regarding HARP 2 (which I imagine will serve as a tempalte for HARP 3). Am I correct that one of the requirements to to qualify for HARP 2 is that you must have been current on your note for the past year?

Frank

Hi Frank,
Thanks again for reaching out to me, as soon as I hear more information regarding the program I will absolutely let you know.

Yes you're correct in saying one of the requirements for HARP 2 are that you must be current for the past 12 months. We have recently changed our specific lender guidelines to 24 months current for HARP. The reason we have made this decision is to increase the overall quality of the loans in which we service.

I would assume the new HARP 3 would have a 12 month rule.

[Cat Damiano]

Hi Frank,
Thanks again for reaching out to me, as soon as I hear more information regarding the program I will absolutely let you know.

Yes you're correct in saying one of the requirements for HARP 2 are that you must be current for the past 12 months. We have recently changed our specific lender guidelines to 24 months current for HARP. The reason we have made this decision is to increase the overall quality of the loans in which we service.

I would assume the new HARP 3 would have a 12 month rule.

Thank you Erik for staying on top of this information and keeping the forum members updated as you hear.

[AussieNick]

Hi Erik,
We currently are paying interest only on both our first and our second and our payments are not high enough relative to our income to qualify for HARP 2, in addition to the fact that our loans are not backed by Freddie or Fannie. However, in 5 years our interest only period ends on the first and in 10 years we have a huge balloon payment on the 2nd. Will we be able to qualify for HARP 3 or will we have to wait 5 years to when our payment increases? I am worried HARP will not be around by then or interest rates will be a lot higher than now. Our 1st is at 6.375 and our 2nd is at 8.25. 100% financed, jumbo, about 15% underwater.
Thanks,
Nick