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What HARP lenders won’t tell you

By Polyana da Costa · Bankrate.com
Friday, June 15, 2012
Posted: 3 pm ET

"No" doesn't always mean "no" -- at least, not when you are trying to refinance your mortgage through HARP 2.0.

Just because one lender refuses to refinance your mortgage through the Home Affordable Refinance Program, you shouldn't assume you don't qualify for HARP, says Jim Sahnger, a mortgage planner for FBC Mortgage in Jupiter, Fla.

The rules under this refinance program are the same for all lenders, but lenders add their own internal rules and they may reject your application if your loan doesn’t meet their requirements.

If you want to save time and the frustration of waiting weeks to be told you don't qualify, ask questions before submitting your application.

The main question

The first question you should ask your lender: "Does your institution have any LTV restrictions on HARP?"

That, alone, will show the lender that you know your game and you're not to be messed with. But most importantly, it will save you the hassle of applying for a loan that you don't qualify for. Even though HARP 2.0 allows borrowers to refinance regardless of how deeply underwater they are, some lenders are not willing to refinance more than 125 percent of a home's value. Others have even lower caps.  Once you know if your lender has a cap on the loan to value (LTV), you'll have a better idea of whether it's worth applying with this lender.

More questions to ask your lender before you apply:

Do you have any servicing restrictions? Are you willing to refinance my mortgage through HARP even if you are not the current servicer of my loan?

Many lenders only approve HARP applications for loans they already service.

What's your minimum FICO score requirement for HARP?

Some lenders want credit scores of 720 or higher on HARP refinances. Others allow lower scores.

If you are refinancing a second home or an investment property, ask if the lender has any restrictions on occupancy. Some lenders do not approve HARP applications unless it's your primary residence.

If you are refinancing a condo or a townhome, ask your lender about any property restrictions, as some lenders prefer to stay away from those types of properties.

Most lenders should be able to answer these questions before taking your application.

Even after you do your homework, your HARP application may be rejected for a number of reasons.

Don't give up easily. Keep shopping around until you find a lender willing to refinance your mortgage, Sahnger says.

"Just because that lender can't do it, it doesn't mean it can't be done."

Follow me on Twitter @Polyanad

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7 Comments
Edward G
August 08, 2012 at 9:25 pm

Jan T: Qualifying for HARP doesn't mean the lenders are going to take a loss on your mortgage! Why should they? HARP participation is voluntary for lenders!

Scott W: A terrible article and answer because the only answer is to SUE YOUR LENDER!

William Coleman: Your answer is to SUE YOUR LENDER!

Any and all HARP, HAMP, HUD, FHA, VA, Fannie Mae, Freddie Mac programs (I believe they currently number 16), are NOT COMPULSORY BY THE LENDERS! It means there is no mandatory participation on the lenders part! Put a 3rd way, participation by lenders is purely voluntary!
Get it?
It's all POLITICAL! Pols HAVE to tell public that something is being done on their behalf (when really NOTHING is being done!), because..., lenders are NOT participating!
Nowhere does it say the lenders are required to take a loss!
The ONLY way to get your mortgage balance below current market value is to SUE YOUR LENDER! if you purchased, re-fi'd, or had a change of servicing agent between 2001-2009, and are MERS registered, you may be eligible for a settlement!

Jan T
July 31, 2012 at 2:45 pm

I have contacted countless lenders. Although I qualify for HARP, I was forced into early retirement and find that I cannot get a loan without a job. I have a very high credit score in the 800's, never missed a payment, never paid late - on anything - and can show I have the means to pay. So the result is I get to keep paying the higher interest rate, but cannot get the lower rate. It's a shame the system is so mired in bureaucracy that real people who have followed the rules cannot get help. I realize the lenders would rather continue to sit on their big, fat wads of cash. It's going to take a very long time for the economy to recover this way, if it ever does. I wish the HARP guidelines would stop saying the unemployed can refinance. Giving people false hope is inhumane. I cannot get anyone to give me the name of a single lender who will refinance for the unemployed. Most of us have worked all our lives only to become second-class citizens in this country.

Note to william coleman: It seems most lenders will allow you to roll closing costs into your loan which is a good thing.

Scott W
July 26, 2012 at 5:44 pm

Wow what a terrible article. Just keep shopping around even after asking all those questions you stated, and still get denied? So they get their hopes up and waste a ton of time looking for something that doesnt exist.

The simple and easy way to know if you qualify for harp are to go directly to Fannie Mae and Freddie Mac websites and use their look up tools, if you do not find your property that way, make a call to both of them through the numbers they have posted. They will verify whether you are currently eligible to use the program. Then start calling lenders...

william coleman
June 18, 2012 at 11:31 am

Is there help for homeowners who have a fixed conventional mortgage that would like to refinance without having to pay so much out of pocket expense.I have owned three homes have never been late on a mortgage payment and have a credit score of 800.I believe there should be help for us also.