New HARP 2.0 Rules to Help Homeowners…Finally

April 27, 2012

As many Chicago homeowners know all too well, often when an organization tries to help others, the first attempts aren’t as successful as one would hope. Best intentions can get caught up in bureaucracy, bad guidelines and a million other stutter steps that hinder the intended outcome. As the trite saying goes, it’s time to go “back to the drawing board.”

Such is the case with the first version of the Home Affordable Refinance Program (HARP) created by the Federal Housing Financing Agency in March 2009. The federal program was created to help homeowners who could still make their mortgage payments, but saw the value of their homes decline in the wake of the housing bubble bursting in 2006.

HARP 2.0 The problem was that homeowners could not take advantage of low-interest rates through refinancing because banks required a loan-to-value ratio not exceeding 125 percent in order to qualify for refinancing.

Unfortunately, very few of the borrowers that the HARP program intended to help could take part because they could not qualify.

So the HARP program was revamped, improved upon and given a new name that surely took the government’s best brains to come up with: HARP 2.0.

The improved HARP 2.0 is now available to Fannie Mae and Freddie Mac borrowers who are underwater in their mortgages and want to refinance.

It was not an easy feat having Fannie Mae and Freddy Mac come on board as they are positioned as mortgage-backed securities owned by investors. Unease about the notion of mortgage-backed securities filled with homeowners underwater in their mortgage required investors to sign off on any borrower trying to refinance.

In order to be eligible for Harp 2.0:

  • The borrower’s loan must be backed by Fannie Mae or Freddy Mac.
  • Borrower’s current mortgage must have a securitization date prior to June 1, 2009.
  • Borrower’s must be current on their mortgage with no late payments in the past six months, no more than one late payment of 30 days or less in past 12 months.

The guidelines for HARP 2.0 have eliminated the loan-to-value ratio cap, which is the biggest change to the program and is expected to benefit homeowners the most.

Lenders, however, have their own guidelines and restrictions on top of the new requirements, so Chicago area homeowners should check with their lenders for more info.

Expectations are high for HARP 2.0. Time will tell how effective the program is.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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