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Mortgage & Finance Journal

Posted by admin on May 16, 2012
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The Following Article is from the Spring 2012 Newsletter

HARP 2.0 program gives relief to existing homeowners, and new loan product to help buyers!

The government touted its Home Affordable Refinance Program (HARP) as a way to get the crumbling housing market on the road to a quick recovery and provide much-needed relief to struggling homeowners. Launched in March 2009, HAMP was supposed to help millions of homeowners get out from mortgages that were worth more than the house– but to date, critics say it has fallen short of expectations. Now the government has refined the program, known as HARP 2.0, in an effort to assist the millions that need a lower mortgage bill.

HARP has been around for a couple of years but hasn’t been that helpful to that many people. They simply  couldn’t qualify.

To qualify under the original HARP program, your loan-to-value ratio had to be less than 125%– but for many struggling homeowners, their home value fell significantly below that, freezing them out of HARP.  To be eligible for HARP 2.0, people need to have a home valued at less than their mortgage, and the loan has to be with Frannie Mae or Freddie Mac . The mortgage has to be in good standing, and homeowners need to have a good payment history for the last 12 months. The new HARP program will expire at the end of 2013.  To check if your loan is serviced by either agency check at or

The original HARP program was geared toward the five biggest loan servicers Citigroup, Wells Fargo, Bank of America, Ally Financial and JPMorgan Chase, which limited the amount of loans that could get refinanced. This new plan includes mortgage companies across the country; these new servicers can now qualify a borrower for a HARP loan even if the borrower’s previous loan had mortgage insurance attached to it. The process was extremely difficult for non-servicers in the past. Mortgage insurers, which have to sign off on a refinancing for customers that have mortgage insurance, are currently working with lenders to develop a process that lets the mortgage provider and the insurer share information to streamline the process. When that happens more people will see HARP loans get approved.

In December as part of HARP 2.0, pricing changes went into effect that lowered the costs to HARP borrowers. Now borrowers with loan values exceeding 125% will also be eligible for HARP. While in theory the loan to value could be unlimited, companies are still going to be cautious about lending to people with high loan to value ratios even though Fannie Mae and Freddie Mac are taking on the risk. There have been a lot of defaults and they don’t want to add more foreclosures to the list.

The government is also hoping to make the approval processes quicker by eliminating, in many cases, the need for an appraisal.  

2nd Trust Deed is Back!

There is new money in the market place and it’s cheap. Let me explain. Prior to this month if you were to buy a property with less than 20% down you would have to obtain PMI (Private Mortgage Insurance). This is a very expensive insurance policy that only benefits the lender not you. And for the most part limited you to a purchase price of $695,000.Now with 2nd trust deed money back in the market place you can potentially buy a house up to $1,100,000 and only put 10% down. The simple concept is you obtain an 80% 1st loan and a 10% 2nd loan. And yes NO PMI. So why would a lender be willing to take this risk? I believe because they have confidence that the market has bottomed and is starting to show real stability.

If you would like to discuss these topics you can always reach me at my office (310) 656-8201, John Ciolino of First Capital Mortgage.

Click Here to download the entire Spring 2012 Newsletter

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