Banks : We Don’t Follow The Official HARP 2.0 Mortgage Guidelines
For as much as the HARP 2.0 refinance program is doing to help underwater homeowners nationwide, the program could do more if not for investor overlays and lender capacity constraints.
60% Of Refinance Applications Are For HARP 2.0
Each quarter, the Federal Reserve sends a survey to its member banks meant to gauge, among other things, consumer demand for loans, and banks' willingness to meet said loan demand. This quarter, though, the Fed did something different -- for the first time, it added survey questions specifically geared at HARP.
HARP is the acronym for the government's Home Affordable Refinance Program. HARP is a mortgage program for underwater homeowners that specifically ignores loan-to-value and, in many cases, waives the need for an appraisal. All you need to qualify for HARP is to have your loan backed by Fannie Mae or Freddie Mac, and to have good mortgage payment history.
HARP is the conforming mortgage equivalent of the FHA Streamline Refinance.
64 domestic banks and 23 U.S. branches of foreign banks responded to the Fed's quarterly survey. With respect to HARP, one-third of survey respondents said that the Home Affordable Refinance Program accounted for the majority of its refinance applications over the last three months; and, that 60 percent of their HARP applications will be approved and funded.
Of course, if sixty percent of HARP applications are approved, that means that 40 percent of HARP applications are not. But as the Fed's survey questions reveal, if you've been turned down for HARP, you should not give up.
Few HARP lenders are following the HARP guidelines as set forth by the government.
Banks : We Don't Follow The Official HARP Guidelines
In October 2011, the government updated its initial HARP program as "HARP 2.0" and one of the program's mainstay is that HARP-homeowners can't be held captive by their current lender. The HARP rulebook says HARP homeowners can apply for a mortgage with any bank that's a HARP program participant.
This becomes especially important in the context of the Fed's Senior Loan Officer Survey.Banks reported to what extent credit scores, loan-to-value and the ability of a HARP applicant to document income affected their willingness or ability to offer HARP mortgages.
Here's what they said :
- 35% of banks add investor overlays, adding new HARP qualification hurdles
- 55% of banks turn down HARP loans because they're "too busy" to work them
- 70% of banks don't want to refinance HARP loans that they don't currently service
Putting it all together, just because you've been turned down for HARP with one lender, it doesn't mean you'll be turned down for HARP by every lender. Lots of good HARP loans are getting turned away at the point of application for no good reason. If at first you don't succeed with HARP, apply, apply again.
HARP Loans Remain In High Demand Nationwide
If you're an underwater homeowner and want to use HARP to get access to today's low mortgage rates, step one is to check if you'll qualify. Get started with a mortgage rate quote and see what the Home Affordable Refinance Program can do for you.
HARP allows for unlimited loan-to-value and gives great rates. It works for loans with mortgage insurance and LPMI, too.