Orange, CA (PRWEB) December 18, 2013
The objective of the HARP program was to assist US homeowners, who had lost equity in their homes, by providing access to new mortgage rates that they would be unqualified for without the program. HARP programs 1.0 and 2.0 helped struggling homeowners in the past, but did not help anywhere near the 7 million projected to benefit from the program. However, the FHFA is giving it another shot in efforts to stimulate the economy.
Under HARP 1.0, eligible homeowners could drop private mortgage insurance (PMI) and lenders could treat their new mortgage requests as if it was their original loan-to-value (LTV). Unfortunately, when HARP 1.0 was released few homeowners were eligible for the program because their homes had lost too much value. All loans over 125% LTV were not HARP eligible. Also, HARP 1.0 was only applicable to homeowners with mortgage loans backed by Fannie Mae or Freddie Mac, along with a very strong payment history. For the people hit the hardest when the housing bubble burst, HARP 1.0 could not be of help. After 3 years, HARP had yet to reach 1 million households.
In late 2011, HARP 2.0 revamped with intentions to get rid of 1.0’s restrictions. HARP 2.0 completely removed the limit on LTV regardless of how much equity had been lost on the home. To qualify, the date that the loan originated could not have been any later than May 31, 2009. Over a million borrowers refinanced under the plan, but throughout 2013, the rate of refinancing under HARP has slowed.
HARP 3.0 is expected to remedy the flaws of HARP 1.0 as well as HARP 2.0. Based on widespread speculation, 3.0 should reduce some of the guarantee fees. Guarantee fees are costs charged to lenders and passed on to consumers in order to insure mortgage bonds against loss. Without as many guarantee fees, mortgage rates could be lower by .75 percentage points. 3.0 will also allow previous HARP users to refinance under HARP a 2nd or 3rd time. HARP 3.0 might also push back the loan origination date to qualify past 2009 to 2010 or even 2011. The most significant element of HARP 3.0 is that it is presumed to allow non-Fannie Mae/Freddie Mac loans to be HARP eligible. This may include Alt-A, subprime, jumbo, and bank-held loans. The revision is very significant. Over 90% of today’s mortgage loans are originated by Fannie Mae or Freddie Mac, but this was not the same pattern for home loans from the year 2001-2007. This means that the borrowers most severely affected by the housing crisis may now have the opportunity to refinance under HARP 3.0.
The purpose of the HARP program is to combat predatory lending and allow borrowers to take full advantage of the markets lower rates. See what people are saying on twitter about HARP via #MyRefi, or share your thoughts.
For additional information, contact: Brittany.williams(at)broadviewmortgage(dot)com.
Since 1988, Broadview Mortgage has distinguished itself through honest business relationships with clients, loyalty to employees, and commitment to empowering and educating those communities. Broadview Mortgage is a mortgage banker and direct lender made up of loan officers with years of experience in the firm and sheer excellence in customer service. The firm works to explore several financial solutions for its clients, for which they choose. Business is initiated and conducted on a word-of-mouth basis. Broadview Mortgage is a delegated underwriter for the Federal Housing Administration (FHA), the Veterans Administration (VA), and the Federal National Mortgage Association (FNMA). Broadview is also approved to participate in several state, county and city programs for First Time Home Buyers.
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