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Will HARP 3 be a charm?

By Polyana da Costa ·
Friday, May 25, 2012
Posted: 12 pm ET

Will the third try be a charm for HARP?  Industry analysts seem to think so. And so does the government.

The first version of the Home Affordable Program failed to help homeowners who were underwater. The revised version, HARP 2.0, helped some borrowers. But there's no way it will help the millions of homeowners eligible for the program. So what do we need? HARP 3.0.

That's in short what housing experts told the Senate Banking Committee Thursday during a hearing on a bill designed to help borrowers refinance their mortgages. The bill, called the Responsible Refinancing Act of 2012, would remove additional barriers that still prevent underwater borrowers from refinancing and reducing the interest rate on their mortgages.

"HARP 2 still is not designed to help enough underwater homeowners," Quicken Loans CEO Bill Emerson said during the hearing, according to a written testimony. "The current proposed legislation would enable every loan originator in the country the opportunity to help the four million HARP eligible borrowers."

Why? Simply put, because this measure would eliminate the risk of lawsuits for lenders that refinance an underwater mortgage. HARP 2.0 eliminated that risk for lenders that refinance mortgages they already service. But not for lenders that refinance a mortgage serviced by another bank.

In other words, if your mortgage is serviced by one of the large banks participating in HARP, you shouldn't have a problem refinancing because that lender has been given the guarantee that it will not be sued for giving you that refinance, even if you end up defaulting later.

But if your bank doesn’t want to do HARP, you may have trouble refinancing. There are exceptions.

Some lenders are taking the risk and refinancing mortgages through HARP 2.0. But most won't refinance a loan through HARP if it's serviced by another lender.

A mortgage servicer is not required to verify the borrower's income or assets when refinancing a loan through HARP 2.0 if the servicer already services that loan, Emerson explained to the committee.

"The same servicer only needs to verify that the borrower has a viable source of income," he says.

But the new lender must verify everything. And if it makes even a minor error, that lender could be forced to buy that loan back in the future. That notion deters most lenders.

Mark Zandi, chief economist for Moody's Analytics told the committee that these HARP changes and other measures in the bill would help millions of borrowers. The bill would eliminate upfront fees and appraisal costs related to refinancing a HARP loan.

If the legislation is implemented by the fourth quarter of this year and mortgage rates remain near 4 percent through the end of 2013, more than 4 million borrowers would be able to refinance their loans, Zandi says.

What do you think? Will HARP 3 be approved? Will it help?

What do I think? I don't understand why it wasn’t done right the first time and I'm not so sure this bill will pass. But I'm for anything that helps borrowers.

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July 10, 2012 at 6:41 am

Even though my loan is owned by Freddie Mac, it originated in December 2009, so like several others on this forum, Harp 2 is of no use to me. I've never had a late payment, my credit is stellar (low 800s) and my DTI is low (under 25%). Over the past three years I've watched many of my 'neighbors' foreclose, short-sale, or just plain abandon homes their homes and now according to a recent appraisal, my house has depreciated 40%. I definitely don't want to put any money into this house for upgrades. I guess maybe it's time to take the 150 to 200 point ding on my credit and just walk away...that's what all the cool kids are doing right?

July 06, 2012 at 3:44 pm

force 2nd mortgage companies to subordinate if the payments are on time and allow the balance to increase to allow closing costs to be rolled in. that is once of the biggest factors preventing people from refinancing

July 06, 2012 at 12:26 am

The problem with Harp 2 is the DTI that ranges from 38% - 45%. This is way to low. Also secondary income. I was turned down because DTI is to high [because they won't consider my 8 year secondary income from my mother] and my LTV on my condo is 109. I also have good credit [740]. I don't have a car payment and I have one credit card with a low balance. I'm 47 and have had good credit for 30 years with no late payments ever. This was a complete waste of time. I wish I hadn't applied for Harp and dinged my credit with an inquiry now. I've decided to hold onto my 5.5 for now. God forbid I have an extra $200 to put back into the econmomy that they tanked.

July 04, 2012 at 2:57 pm

The one problem with HARP that everyone seems to be missing is many have SECOND mortgage (Home Equity Loans or Credit Lines) that pushes your CLTV higher. HARP 2.0 fixed this with 'unlimited LTV' but only certain lenders are participating in the program and if you're not the BIG BANKS you can't do the 'unlimited' HARP 2.0 Where rates are right now if you let everyone refinance who's underwater to the lower rates and consolidate just mortgages the true Average Homeowner would save more than $3k/yr.

July 03, 2012 at 7:14 pm

the problem with Harp and Hamp are they are only for FHA and Fannie Mae backed homes - there is NOTHING for USDA loans in PA - I simply want to refi to a lower rate so my payment is lower but my score isn't high enough (b/c of medical bills) and I can't afford the fees (hence the reason for wanting to refi). The med bills are my husbands - I am the sole person on the mortage and am quite capable of paying it on my own but not with the new medical bills. I have two very small under 300 credit cards and no other debt, my payments are all made on time including my utilities and such, yet I can't qualify for any help. I am afraid that if the economy continues along the same path, I am going to end up being one of the ones that just walked away.

June 28, 2012 at 2:44 pm

I am in the same boat as Jim. I would qualify for nearly all of the conditions, but since my loan was in December 2009, I don't. That leaves my trying to get a normal refi, but since I owe way more than my house is worth, I am dubious that will work for me. Hopefully, HARP 3.0 will eliminate or adjust the May 31, 2009 stipulation.

June 20, 2012 at 1:23 pm

HARP doesn't help me due to its May 2009 condition. My loan was sold to Fannie Mae after May 2009. I hope HARP 3.0 relaxes that condition.

June 13, 2012 at 11:40 am

We've been trying to get a refi since HARP 1.0, always told we don't qualify for many different reason. To begin we are still upside down LTV - 136%. We were also told our mortgage wasn't backed by Fannie Mae/Freddie was like pullng teeth to get an answer on this. We have never been late, credit scores above 750 and BOA (current mortgage holder) wouldn't do anything until recently. So I'm not sure why this change has happened, read on...

A couple of months back my wife ask for BOA to research and tell her who exactly owns/backed the mortgage she finally got a letter saying it was indeed Fannie Mae! I also recently filed a complaint on the Consumer Financial Protection Bureau's (CFPB) website regarding BOA's repeatedly telling us we don't qualify and all the circumstances in our case.

I'm not really sure what has happened, Recently we were contacted by a BOA consumer advocate in response to my inquiry on the CFPB's website and he told me he was making initial contact, but was looking into our situation to see what can be done, if anything. Then two days ago my wife, now with letter in hand, contacted BOA-Mortgage and was told that we do qualify to refi under HARP and was given four quotes with rates, to get things going.

Is this HARP 3.0?... CFPB? a combination of both? I'm not sure...however we are excited about the refi, because we are going rent out this property and moveinto a bigger Single-family home. By refinancing it, we will at least break even on the month 2 month cash flow of a rental versus a negative c/f of $500 month and we will be able pay it off in 20 years (currently 23 years left) and projecting some equity within 10 years!

If I can give any advice, it would be ... don't take NO for an answer... keep asking/complaing and stay persistent!

June 08, 2012 at 3:50 pm

I heard a rumor that Harp 3.0 might be able to help non Fannie and Freddi Mae serviced loans. My problem is my loan is through my bank that is a Portfolio Lender. I am upside down as well and don't have any options. Does this sound true?

June 05, 2012 at 9:34 am

I'm currently trying to get a modification or refi using HARP 2.0 with Bank of America (my current mortgage holder). 7 years of payments, never late, but I'm coming out of a 7 year interest-only payment period and having to start repaying principal (amortized over the remaining 23 years of my mortgage) is going to kill me. I only planned on being in the house for 5 years in the first place so the 7 year interest-only period didn't bother me. Real estate was always a good investment. Who knew the market would crash? Now I'm underwater by about 20% and can't sell. I want to refi into a fixed rate loan (I'm currently adjustable and paying 6.25%) so I can afford to ride things out long enough to eventually sell, but it doesn't look like BoA is going to agree and they're just trying to wear me down with paperwork. I've just sent them a copy of my bill for homeowners association dues for the 3rd time. What a pain. Also ... the quotes I've seen for various local banks doing HARP are in the 5% range. I haven't seen one in the 4%'s and certainly not the "national average" in the 3%'s. What's up with that??