Posts Tagged ‘harp program refinancing’

Restructured Home Affordable Refinance Program – Is NOT Good Enough

Restructured Home Affordable Refinance Program

Bob Clement

There seem to be a simple truth that slips away from the eyes of the decision makers. The is a need for a better Restructured Home Affordable Refinance Program! There are millions of household that work, pay taxes and try to survive the economic earthquake of 2008. All the financial programs are somehow missing the average Joe and his wife.

People are in deep trouble when their home property is underwater, worth less than the mortgage they still have to pay the lenders. This negative equity is a ticking bomb, as the lenders have just as much to lose, if these underwater properties drown in deep (foreclosure)waters. There are not enough new refinancing options for underwater mortgages, as Former U.S. Rep. Bob Clement writes in the review below.

“Recently, President Obama unveiled the restructured Home Affordable Refinance Program (HARP), one of the only programs assisting homeowners who are “underwater” in their mortgages. The program was set up in 2008 to help homeowners refinance, but the restrictions were too rigid.

HARP reforms are improved but still restrictive. HARP applies only to homeowners with Fannie Mae and Freddie Mac loans. To qualify, they must have paid six consecutive months on time. Closing costs and other fees will be reduced. Income requirements have been waived, and insurance can automatically transfer to the new loan.

Other institutional lenders need to find ways to offer more flexibility in their mortgage requirements. Bankers tell me their hands are tied by new stricter federal definitions of qualified mortgages. Perhaps they can set up special loan categories to help young professionals and promising wage-earners become homeowners in spite of their school debts.

I understand the lending institutions’ caution. I sit on the board of directors for a small bank myself, but standards that are too strict will cause more stagnation in the housing market and compound the problem. I believe we have overcorrected the problem that spawned the bubble burst.

We need home mortgage policies that help ordinary families avoid foreclosure.

The rich can take care of themselves, the poor will be taken care of, but who rallies for the middle class? They continue to pay the taxes, funding the programs for those who can’t and those who won’t. We bailed out Wall Street; it’s time we give the middle class some overdue help.” Read More…

Former U.S. Rep. Bob Clement is president of Clement & Associates, a business development firm (www.bobclementassociates.com) He represented the Fifth District of Tennessee 1988-2003.

I think Former U.S. Rep. Bob Clement has touched the subject in the right aspect. The rich will manage, the poor will be taken care off by others (as it was always) but the working class people with underwater mortgages need refinancing solutions better than the Restructured Home Affordable Refinance Program.

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Need HARP or HAMP? See Eligibility Requirements For 2011

Eligible For HARP or HAMP Requirements

HARP or HAMP? Are you eligible? What are the HAMP or HARP requirements for 2011? Millions of homeowners are struggling to survive financially after the 2008 depression. Their home value have declined deeply and many have lost their jobs, sending them a one way ticket to foreclosure. The Obama administration has issues some programs intended to help these homeowners, but far too many of them at 2011 do not know whether they are eligible for the HARP or HAMP requirements.

HARP (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program) are two programs made as part of the Homeowner Affordable and Stability Plan (HASP) their main porpoise is to help homeowners in poor financial situations a financial life-jacket. Both programs are aiming to help the people who have underwater refinancing needs. “Underwater” means that their current mortgage is much higher than the house value, this happened because after the subprime disaster of 2008/9 houses value plunged deeply.

For example a homeowner takes a mortgage at 2007 for a house value of $150,000, now at 2011 the home market value is $100,ooo, and the mortgage is $120,ooo. The loan to value factor (LTV) is 120%. This is an unstable situation where the mortgage loan is much higher than the market value of the property, because it is risky for the homeowner and the lender too. These kind of mortgages with negative equity are held by millions of households, it is estimated that 25% of the mortgage market are underwater!

HARP Refinancing Program Requirements

The HARP was extended until June 30 2011. Basically many see this refinancing program as a failure, because it was used by a small percentage of the homeowners it was meant to help. As little as 709,900 refinances were done through this program, which is disappointing compared to the millions of borrowers it was intended to serve. The HARP assistance program is for people who are NOT in danger of foreclosure.

The eligibility to join HARP is to meet these requirements:

1. 1 Year Homeowner Occupied – The homeowner must occupy the eligible property for at least 12 month before applying to the HARP assistance program.
2. Must Be Individual/s – The HARP does not support cooperation, companies, partnerships or any other non individual legal identities. The homeowner qualifying must be a person.
3. Must Be Current On Mortgage – Since the refinancing process means getting a new one in new terms, the lenders need to see you are a good customer, this means not being behind on any mortgage payment in the last year.
4. 30 Days Deadline - You must not be late on any mortgage payment by over than 30 days.
5. Loan To Value Ratio – To qualify for the HARP assistance plan your LTV must be below 125%. You may be underwater, but you should not be at the ‘bottom of the sea’ to be qualified.
6. Freddie or Frannie – The mortgage you currently have needs to be backed by Frannie Mae or Freddie Mac to qualify. If you are unsure if whether your mortgage belongs to either of them check at the making home affordable (MHA).

HAMP Mortgage Modification Requirements

The HAMP modification program has a different set of requirements as this program is meant to help people who suffer a decline in income together with a upside down mortgage (underwater).

The HAMP modification program has three stages, the first stage is the qualification process, when the homeowner has to meet the minimum requirements as followed below, the second stage is a trial test, to to be current on the new mortgage for 90 days, only then the new mortgage terms become permanent.

For the first stage HUD has specific HAMP eligibility requirements:

1. Front End Debt To Income Ration Of 31% – The ‘front end’ debt to income ratio is a measurement of how much of the gross income (before taxes) goes to returning the mortgage loan. People who have over 31% means they are financially sinking, and even if they are not yet delinquent on the mortgage they will soon be.
2. Back End Debt To Income Ratio of 51% – The ‘back end’ debt to income ratio is the real factor for the family financial survival, as it takes into calculation all other debts too (credit cards, car loans, student loans and other obligations). Having more than 51% of the gross income owed as debts means a financial slippery slope or crash is predicted, these families with back-end debt to income of 51% or more will need to join debt counseling program.
3. Owner Occupied Mortgages Only - The federal government want to help homeowners and not investors and home flippers. The borrower will need to prove they are living at the home they wish to include in the HAMP program, it can be 1-4 unit.
4. Mortgages Before 2009 – Since this program is meant to help homeowners from the 2008/9 economic slowdown, only mortgages which were originated before 2009 are eligible to be qualified in HAMP.
5. Unpaid Principal Criteria – The HAMP program wishes to help people who are going underwater, if not at the present than may be in the near future. Less than $729,500 unpaid principle for a single home unit. Less than $934,200 for 2 units; $1,129,250 for 3 units and $1,403,400 for 4 units.
6. Second Lien – This is the most ‘tricky’ requirement, as it is beyond the homeowner reach and depends on the goodwill of the second mortgage lender. The HAMP requests the holder of the second  lien (the other lender) to take a subordinate position with regards to the modified loan.

HAMP or HARP Success or Failure

Unfortunately too much hope was placed on these two programs to pull out the drowning homeowners from the underwater mortgage situations they have been at. Though a lot of federal funds have been invested on these two programs (and other) the figures are not optimistic. For the end of 2010 the foreclosure filings have increased dramatically!  Bank repossessions continue to increase.

The main issues which make these programs unable to breakthrough are the reliability on the lenders to finance most of the modifications and fit the new mortgages into new terms and conditions, which in some cases means losing money. With too many people loosing their jobs and having low credit scores holds many of them from getting better rates.

For the HAMP program over 1.1 million homeowners are under a trial period, this means they are at the second stage, where they have qualified for these requirements and now they have new terms on their mortgage. If they manage to be current for 90 days these new terms and conditions will turn permanent.

Maximum Debt to Income Ratio – Relief Refinance Mortgage

Relief Refinance Mortgage Plan Debt To Income Requirements

Many people know that the first parameter a lender will check when they go through your mortgage qualification request is the Debt to Income ratio. This DTI (Debt to Income) ratio parameter requirement  is one of the most important figures for processing the mortgage as the debt to income ratio has impact on the amount they will lend, the interest rate and the life term of the new mortgage.

It is highly recomended that you obtain professional mortgage ‘tips & tricks’ guide, it will save you thosands of dollars, in lower rates and deleting ‘junk’ fees that lenders feed people who are unaware.

Home Affordable Refinance Program (HARP) was made to support homeowners to refinance their mortgage to better rates. Here are a few guidelines to help you swim through the refinancing debt to income issues.

Debt to Income Ratio Logic

The logic behind the debt to income ratio is to have some kind of ‘rule of thumb’ on how much from a persons income should the mortgage loan payments be. This ratio is quite easy to calculate, and helps the lender and the borrower know how much money per month the borrower can handle.

Each lender can have a different DTI figure on which they can decide how much money to lend, and how long to stretch the mortgage term. There are two kinds of debt to income figures, ‘front end’ and ‘back end’ DTI, they are calculated similarly but usually the Back-End Debt to Income is the figure the lenders look at.

Calculating the Debt To Income Ratio

In order to get a figure of Debt To Income, a person needs to add all the fixed mortgage expenses which are expected to be paid monthly, including private mortgage insurance, homeowner’s insurance and property taxes. Then divide this sum by the income (before taxes). This is the Front End Debt To Ratio, usually the small figure and some lenders will want to see it is lower than 30%.

The more relevant ratio figure is the Back End Debt To Income, this figure is calculated the same but on top of the mortgage expenses you need to add the all the monthly fixed payments you have, including car loan payments, student loan payments, revolving credit payments etc.. this is then divided by the gross income.

Back End Debt to Income has a higher percentage figure, as paying back debts of all kinds is a larger slice of the family income than the mortgage expenses alone. This is the real figure that needs to be related to when refinancing.

You may see both figures placed together like this: 29/40 This means Front End DTI = 29, Back End DTI = 40. In this example the lenders DTI limit requirements are that the mortgage expenses will not exceed 29%, and the over all family debt will not be higher than 40% from the gross income.

Relief Refinance Mortgage

As a part of the federal Home Affordable Refinance Program (HARP), Freddie Mac launched the Relief Refinance Mortgage program. This program allows people to refinance their mortgages with slight ease on some of the requirements, all intended to help people refinancing their mortgages after he 2009 economic crash down.

One of the factors that the Freddie Mac indicated they will give some relief is the Debt to Income ratio requirements. For the lenders the most safe course of action is to lower the ratio limit, and by that to make sure the borrower has enough free cash to pay back the loans. Freddie Mac new Relief Refinance Mortgage plan, allows a raise in the Maximum Debt to Income ratio, and making refinancing possible for more families and consumers.

Relief Refinance Mortgage – Same Servicer

Same Servicer – The Freddie Mac indicates that when the refinance request is processed by the same current mortgage lender (same servicer) the Relief Refinance Mortgage – Same Servicer does not have a maximum debt-to-income ratio requirement.

There is an exception if there is an increase in the monthly payments that exceed 20% in the new refinanced mortgage compared to the old mortgage, than the debt to income maximum limit (back-end) is set to 45%.

Relief Refinance Mortgage – Open Access

Open Access means the refinancing is processed by a new lender, and not the same one for the first mortgage. In this case by the Relief Refinance Mortgage guidelines each lender does it’s own assessment and can determine their own Debt To Income Limit requirement.

Reading free articles is fine, but you probably need a mortgage tips guide, check this mortgage ‘tips & tricks’ written by a former banker who lets you know how to skip lenders ’boobytraps’ and get lower rates! Mortgage Loan Tips Blueprint.

Home Affordable Refinance Program HARP

Get The Most Out Of HARP Program

If you seem to find it difficult to be able to refinance your present mortgage or seem to be experiencing difficulties carrying out your obligations upon your existing home loans? If your answer is YES, play the HARP and don’t play on your money.

HARP – (Home Affordable Refinance Program) is a component of the 2010 Obama administration’s $75 billion Making Home Affordable plan. Provided for all homeowners who are not able to refinance their present mortgage or who seem to be experiencing difficulties carrying out their obligations upon their existing home loans.

 This Obama administration 2010 HARP mortgage support is an excellent chance only for people who have home loans operated through one of two: Fannie Mae or Freddie Mac.

Fannie Mae and Freddie Mac, are the two mortgage holders which the 2010 Obama administration federal government mortgage loans took charge of last year. Fannie and Freddie at the moment are chopping interest levels for home loans they utilize to well under 2.5%, together with the goal to help people buying a home to achieve a maximum of 31% of a person’s gross cash flow spent on mortgage payments.

How to qualify for Home Affordable Refinance Program ?

First you must check if your loan is owned or has been guaranteed by Fannie Mae or Freddie Mac?”

Ask your mortgage lender or service or call directly for Fannie Mae: 1-800-7FANNIE (8am to 8pm EST) For Freddie Mac:1-800-FREDDIE (8am to 8pm EST).

 Before applying check if you stand these terms of 2010;

 1. You are the owner-occupant of a one- to four-unit home.

2. The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac.

3. At the time you apply, you have not been more than 30 days late on your mortgage payment in the last 12 months; or, if you have had the loan for less than 12 months, you have never missed a payment.

4. The amount you owe on your first lien mortgage does not exceed 125% of the current market value of your property.

5. You have a reasonable ability to pay the new mortgage payments.

6. The refinance improves the long term affordability or stability of your loan.

Is Home Affordable Refinance Program for you?

You should not decide on new home loan simply on its yearly interest rate. Your decision to refinance a mortgage loan will need to merely be done in the long-term financial savings to be greater than the original costs. For you to determine your break-even factor, divide the price of the actual refi by your monthly financial savings. The new sum symbolizes the amount of months you have got to remain at your property to generate this type of tactic to succeed.

 Any home owner with a 30-year, $200,000 mortgage charging 8% interest would probably pay out $1,468 every month. Having a 6% interest quote, a person’s payments are going to be 1,199$ which will save you 269$, meaning your break even will be after 8 month. *Assumes $2,000 closing costs

 Banks are generally seeking for modifications which credit seekers could live with so appliers need to clearly show evidence of existing earnings as well as that the income will keep going not less than 9 months.

Even with the HARP program unfortunately for many typical unemployment compensations tend to be a component of six-month process, therefore they do not meet the criteria. Making this plan a saving rope for those who probably would have managed without it.

Is it worth to refinance a mortgage 2011

What To Do When It Is Time To Refinance a Mortgage?

Like everyone else, you probably heard that everyone is speaking about ‘refinancing their mortgage’.. You probably too asked your self some of the most common questions home owners with a mortgage ask: Should I refinance my mortgage ? I NOW the right time to refinance my home loan ? What does it mean  ? who can do it ? Is it really worth to refinance my mortgage ?

So here are some of the major guidelines for learning “Does It Pay To Refinance My House“.

Is It Worth To Refinance My Mortgage 2011

1. Do you want to save and check if your monthly payments can be reduced. While refinancing your payments will be reduced if you get a lower interest rate. The monthly payments can be reduced also if the lime length of the loan is extended.  If you think on going on the extended term possibility, just bear in mind  the interest rates you will be paying will be higher during the life of the loan. This alone is when refinancing really pay.

2. Do you want, or can you reduce the number of payments left ? This means finishing off the mortgage sooner than originally planned. If you shorten the length of your mortgage by reducing the term of the loan, the mortgage will end sooner but your monthly payments will go up.  Make sure you can stand the raise. Use one of the mortgage payment calculators. Though the payments rise you still will be saving some of the loan interest rates, and will be a ‘free home owner’ sooner.

3. Compared to the mortgage rates the credit card rates are much higher ! So in case you have huge credit cards depts, you have a possibility to refinance and borrow more than the current loan balance. It is up to your home owner financial education and ability to use the extra cash wisely. Pay off high interest debts such as credit card balances or bank or lenders installment loans. If that loan is the only mortgage you have, you will be able to continue deducting the mortgage interest from your Federal income taxes 2011 while it acually payed off your other depts.

4. A refinancing program might allow you to consolidate 2 loans into one. This means that instead of paying back 2 separete loans, now at 2011 they will be both combined into one new loan to pay. In many cases when you get the best mortgage rates the payments will be lower in the over all.

5. When thinking of a refinancing solution for your mortgage, refinancing will help you convert an Adjustable Rate Mortgage (ARM) into a Fixed Rate Mortgage (FRM). At Fixed Rate Mortgage (FRM) the lender can not increasing your monthly interest payments over the life of the loan. Which he can and does usually at the ARM home loans. This means your monthly payments will not change dramatically over the years which will help you plan your financial moved some time a head.

It is worth to check what the government can help you with the Home Affordable Refinance Program  – HARP. These are some of the best out there for those who qualify.

Before you refinance, you must know, improving your FICO score even by 30-40 points makes you a better negotiator with the lenders.  You will get better rates, and save a lot of money on monthly payments.

Learn how thousands of homeowners improved their FICO score in 37 days.