New HARP Guidelines (Home Affordable Refi Program), No BK waiting period.

[HHM]

Nov. 16, 2011

In a last ditch effort to stave off a continuing foreclosure melt-down, FHFA, Federal Housing Finance Agency has announced changes to the wildly UNsuccessful HARP program. HARP was designed to help underwater homeowners refinance into more affordable mortgages, but the existing guidelines did not account for actual market conditions, as such, very few homeowners qualified.

First, the HARP program has been extended to December 2013. Second, the 125% loan to value requirement for 30 year fixed loans will be removed and has no limit, but for other loan types, the loan to value must be less than 105% under most circumstances. Unfortunately, it is these other loans, like ARM’s, that get homeowners in the most trouble. If the mortgage payment will significantly increase, then then the borrower must re-qualify with a credit score greater than 620 and a debt to income ratio of 45% or less.

Also, and importantly, there is no more waiting period or cooling off period for bankruptcy or foreclosure. This change has the most promise. Chapter 7 bankruptcy eliminates the homeowners other debt thereby fixing the debt to income ratio; opens up the opportunity to settle with a wholly unsecured second mortgage, leaving only a first mortgage. With no bankruptcy or foreclosure cooling off period, the homeowner can immediately start the HARP process to refinance their mortgage.

However, the key to HARP is to not be delinquent on your mortgage payments. Unfortunately, when homeowners contact their lenders about a “modification” (that is HAMP), the lender requires the homeowner to default on payments before the lende will help. Don’t do it. HAMP is, likewise, a dismal failure, and set to expire in December, 2012. HARP requires you to be current on your mortgage for 6 months prior to applying and only have one 30 day late payment in the 7-12 months prior to HARP.

So, the new strategy, homeowner files chapter 7 bankruptcy, stays current on their mortgage, and applies for HARP. Something to consider!

Source: Fannie Mae Selling Guide Announcement, SLE-2011-12, Nov 15, 2011

By Matt Berkus.

http://custerroberson.com/2011/11/new-changes-to-harp-home-affordable-refinance-program-means-new-bankruptcy-strategy-for-underwater-homeowners/

[despritfreya]

I can tell you right now this "program" will not work. Refinancing is expensive. Unless the new lender is going to waive 1) the points up front, 2) unnecessary application and processing fees 3) closing costs 4) and a slue of other hidden charges, most homeowners will not be able to afford to refinance even if they "qualify". The cost of refinance can be as much as $7,000.00 and is usually not added to the loan. Maybe HARP addresses this but, I doubt it.

Can't wait to see how this new plan "helps" the average "Joe".

Des.

[Freddy03]

Why would I want to refinance my $245K mortgage when my house value is $109K? No thanks - I'll pass.

[BKorbust]

Too bad I listened to my lender and missed a couple of payments to try and be eligible for HAMP.

[dneil]

Better yet... why put yourself back on the hook after paying for a bankruptcy ??? I am going to suck it up; the fact that I went into close on our home 5 years ago, on the day that our purchase agreement was to expire and was blindsided by countrywide mortgage. Yup... went to sign the paperwork and they changed our mortage terms. They split the mortgage into a first and second mortgage. The first at 6.25%, the second at 10.25 % and after 15 years of paying 199.00 a month, I would owe the same amount I had borrowed in a balloon payment. I signed the papers under duress because I had entered into an agreement with the seller where I had given them 5 thousand cash (they paid cash for their home and owned it outright) in exchange for the price to be reduced by 10,000. So.... I pay extra on that second mortgage in hopes to get it paid off before the next 11 years. I have never felt so intellectually violated, and financially suckered in my whole life than I did that day. To this day I wish to God that there was re-percussions that I could take for the loan sharking bullcrap that went on that morning... they (the mortgage company AND the broker I used) knew full well that I suffered from severe anxiety issues and yet they put me in a situation where I felt I had no way out other than to find a way to dig out within 15 years. For every 199.00 payment I make, less than 20 dollars goes toward my principle. So for this reason, I have to make extra payments on the principle and Hope to God that some day this will end on a good note for our family. Thankfully the bankruptcy gives us that little bit of peace of mind that if something super major happens, like my husband falling over dead, I can walk away without being sued financially. Let's hope that doesn't happen though... I am in the middle of an unexpected pregnancy with a little boy (awww) who has been diagnosed with down syndrome. If I didn't believe that God truly has a special plan for us, I would believe that the laws of nature were completely against us. My first boy is affected with autism. Ah, it is okay... one day at a time, hearts full of love and there is food on the table and ..... the relief of bankruptcy. We've been lucky.