Tagged with " HARP"
31 Dec
2011
Posted in: My Ongoing Story, Process
By    Comments Off on 5 HARP Program Pitfalls

5 HARP Program Pitfalls

For the past 2 months, I’ve spent 1-2 full work days per week researching and applying for a program designed to help underwater homeowners like myself. I still would not call myself an expert, but I know a lot about the program, and understand a few of the ways in which this program is not doing it’s job. These are just a few that I’ve uncovered while devoting an unfathomable amount of time to understanding why the process is so difficult.

1. Overlays

Every lender has overlays, their own set of rules about the HARP program that are more restrictive than the official guidelines.

Case in Point: For 2-3 months, Bank of America had a freeze on approving homeowners with second mortgages for the HARP program. This rendered me ineligible, not by HARP standards, but by Bank of America standards.

2. Terms & Naming

There are a lot of programs, many with similar names, and each organization or lender has their own names, in some cases, making it even more confusing.

Case in Point: Bank of America told me that I did not qualify under the Making Home Affordable Program. That is the program that regulates HARP, HAMP and as many as 7 other programs. This was confusing, because I didn’t know if they were attempting to refinance me under HARP or HAMP (two very different programs). When I asked for clarification, and said I wanted to refinance under HARP, they said HARP was the same thing as the Making Home Affordable Program. I still don’t know if they had me in the right program.

3. Knowledge Barriers

Lender representatives and community organizations don’t always have all the facts, or don’t understand them, but will tell you that they do.

Case in Point: I spoke with 2 different people at the Community Neighborhood Housing Agency in St. Paul to get assistance in applying for the HARP program. The 2nd person was extremely helpful and understood the program very well. She said I should qualify. The first person I spoke with, at the same organization, said I did not qualify and was not underwater (which was extremely incorrect). When I asked her to add the numbers again, because I was sure I was underwater, she aggressively asserted that I was NOT underwater. This is an organization that helps homeowners understand programs like HARP every day of the week.

4. Confusing or Vague Guidelines

Many guidelines in the HARP program are vague, allowing for lenders to misinterpret or use vague areas to their advantage. In fact, the program itself, though “strongly encouraged” is optional to any and all lenders.

Case in Point:

  • Lenders who hold homeowners’ 2nd mortgages are encouraged, but not required to subordinate the loan. (If they don’t subordinate, HARP refinance is not possible for these homeowners.)
  •  The “No Appraisal” rule is not required, and leaves it up to the lender’s discretion as to whether it is needed.
  • In lieu of an appraisal, the way a home’s value is determined varies widely and can be pulled from a variety of sources (including zillow.com, estimated tax value and lender-generated data, leaving homeowners vulnerable to errors and inconsistencies.
  • The financial documentation checklist varies between lenders, organizations and official guidelines. Some of these are extremely time-consuming to produce (especially for self-employed people), and may or may not be required once the process starts.

5. Program Implementation Delays & Changes

Guidelines take too long to implement (4-5 months from release date), and historically, will change before the lenders finally implement the program. This lessens the amount of time that homeowners can take advantage of the program, and in some cases requires applicants to re-gather documentation.

Case in Point: When the program was officially released, I took several half days off to talk to gather federal tax returns, year-to-date monthly expenses (monthly profit and loss), homeowner’s insurance statement and other documentation. This was outlined in various places online, and I was told to gather this information from the Community Neighborhood Housing Agency.

Some items took hours to prepare, and I discovered later would not be needed (for example, year-to-date monthly expenses). Being freelance, I was able to juggle this, though it was not easy. Not everyone is in a position to keep taking off work to gather and regather documentation during work hours, only to discover later it wasn’t needed in the first place.

31 Dec
2011
Posted in: HARP in the Media
By    Comments Off on NY Times: Foreclosure Relief? Don’t Hold Your Breath

NY Times: Foreclosure Relief? Don’t Hold Your Breath

In an article entitled Foreclosure Relief? Don’t Hold Your Breath, (December 24th,2011) the NY Times reported on a new program to help homeowners with foreclosure reparations.

“Throughout the foreclosure crisis, Washington has done little to help people hang on to their homes. All those programs that were supposed to help — HAMP, HARP, Hope for Homeowners — have mostly failed.”

More than a helpful link on information about the HARP program itself, this link is provided to show the overall messiness of all of these programs. For anyone who is going through the foreclosure process (or is thinking about it), in some cases these programs can hurt, more than they help. (So, do your research.)

“None of this surprises Ms. Cohen or others familiar with the regulator. “This is the O.C.C . that we’re talking about,” she said. “It has a long record of favoring banks over homeowners.”

20 Dec
2011
Posted in: HARP in the Media, My Ongoing Story, Process
By    Comments Off on Bloomberg News: No Relief for Homeowners Shut Out by U.S.

Bloomberg News: No Relief for Homeowners Shut Out by U.S.

Today, Bloomberg News, a multinational financial news organization, published an article about the HARP program.

No Relief for Homeowners Sut Out by U.S. focuses on the stories of several people (myself included) who have had difficulty taking advantage of the record-low percentage rates that could help alleviate excessive financial burdens.

My attempt to refi through my primary home lender, Bank of America, resulted in 3 different refi outcomes within a 2 month period under the same program. (Outcomes were: I did not qualify, then was offered 5.375%, then 4.5%.) In other words, not even the lenders who distribute the programs understand the guidelines.

13 Dec
2011
Posted in: My Ongoing Story, Process
By    Comments Off on 3 Bank of America Refinance Attempts, 3 Dramtically Different Outcomes

3 Bank of America Refinance Attempts, 3 Dramtically Different Outcomes

Three times in the last month, I’ve applied for HARP 2 through my current lender, Bank of America, and received 3 outcomes.

Today I heard that HARP 2 was not available through Bank of America until December 1st, 2011. So, I called back to see if, now that HARP 2 was available, if I would get a more appropriate outcome.

On my third attempt, Bank of America told me that as of December 13 (today’s date), they have not released the HARP 2 program, and that they “do not have a date as to when it was going to show up.”

In all 3 refinance attempts I specified that I wanted to refinance through the new HARP 2 program, and none of the 8 or more people I spoke with mentioned that HARP 2 had not been released. According to the most recent representative I spoke with, each attempt to refinance through Bank of America would have been through the original HARP program. But each attempt yielded dramatically different results.

3 Different Outcomes Breakdown

Here’s the breakdown of the 3 attempts, starting with my current scenario, for reference, all using 30 year fixed as a consistent baseline.

Current 1st Mortgage / 6%

$ 988     Principal
$ 300     Escrow
$1288    Total monthly payment

1st Attempt — Not Approved

Early November, 2011

I was not approved to refinance through the HARP program at Bank of America, my current loan holder.

2nd Attempt — 5.375%

November 21, 2011

1. I qualify for the loan at 5.375, 30 year fixed, but the percentage is not that great, they say, because of my 2nd mortgage.

2. While the appraisal fee of $425 not required, there are still over $3000 in closing costs.

3. It will take approximately 2 years to recoup the refinance costs.

$ 382    1/4 of a discount point
$1175    Bank of America’s total fee
$1567    3rd party fees

$3124    Total closing costs
$  460   Out of pocket cost

$ 856    Principal
$ 264    Escrow
$1120    Total monthly payment

$ 168    Total monthly savings

3rd Attempt — 4.5%

December 13, 2011

1. I qualify for the loan at 4.5%, 30 year fixed.

2. Closing costs are $691 less than the second attempt.

3. It will take 4.6 months to recoup the refinance costs.

Discount points are not mentioned in the conversation.

$191       Discount Points
$866     All lender fees (Bank of America’s total fee)
$1567    3rd party fees

$2433    Total closing costs
$      0    Out of pocket cost

$ 775    Principal
$ 264    Escrow
$1040   Total monthly payment

$ 248    Total monthly savings

Loan Amount Breakdown

$148,484  Current total loan amount
$1,380       Current escrow balance

$153,000  New total loan amount
$1887        New escrow balance

$188          Interest

$4516        Total loan increase

In Conclusion

The third attempt looks like what I should have been offered all along. I’m happy to finally have received a more appropriate interest rate, but am more confused than ever about actually Making Sense of HARP.

2 Dec
2011
Posted in: HARP in the Media, My Ongoing Story, Process
By    Comments Off on NY Times: A New Shot at Mortgage Relief (Making Sense of HARP: Or Is It a Misfire?)

NY Times: A New Shot at Mortgage Relief (Making Sense of HARP: Or Is It a Misfire?)

2 days ago, in an article entitled “A New Shot of Mortgage Relief,” the NY Times reported that interest rates conventional mortgage rates are averaging around 4%. 70% or the 22 million borrowers who are eligible for the HARP refinance program have 5% interest rates or higher.

To recap, my current interest rates are 6% and 8.49% fixed – and Bank of America offered me a HARP refinance at 5.375% with $3000 in closing costs on the 6% loan. If the HARP program is refinancing homeowners who have 5% interest rates, why are they offering me 5.375%, only .625% lower than my current 6% interest rate? (Their explanation was that it was contingent on me having a 2nd mortgage through another lender.)

The NY Times article highlights some critical viewpoints about the HARP and HARP phase 2 revised programs. Among them, Mr. Compton, a public transportation planner and homeowner is quoted in this article with the “…should be a ‘perfect fit for me.'” sentiment.

“It angers me quite a bit,” said Mr. Compton, who added that unlike other borrowers, he never took out a home equity loan during the boom and has consistently paid his bills. The refinancing program, he said, should be “a perfect fit for me.”

It’s a statement that I have been heard to say verbatim on many occasions about the HARP program. If my situation is the typical case study that HARP is using to illustrate it’s action plan, then it’s not doing it’s job.

2 HARP 2 program issues:

  1. The program is not standardized between lenders.

    Lenders are able to created their own sub-criteria for HARP qualification. In other words, they can customize the program to suit their best interest, rather than the best interest of the people the program is designed to aid.

    It’s not enough to tell American’s that this program exists to help people manage their continuous submersion into underwater status. We need to see the number of underwater homeowners who are helped (or not helped) by the program, not just in the NY Times, but in the local media, and the Occupy Wallstreet protests. This has a direct affect on how the American public views people who foreclose. Many still believe that foreclosures can be prevented if people work harder to access programs. In fact, the programs are extraordinarily complicated, narrow in scope and hard to access. And sometimes cost homeowners upwards of thousands of dollars, sometimes with no success.

  2. Standardization on how lenders determine the value of your home without appraisal is ambiguous.

    It’s great that homeowners no longer have to pay $300-$400 for an appraisal every time they attempt to refinance. Unfortunately, lenders have found a way to use this to their advantage.

    Case in point: The Community Neighborhood Housing Agency told me that lenders can look at Zillow.com or your Estimated Tax Value to assess the value of your home in order to determine if you qualify. On Zillow.com, my home is valued at $124,900. My Estimated Tax Value is $40,000. When I was gathering information on HARP refinance through Bank of America, they told me that Fannie Mae valued my home at $178,000 (a price tag I’ve never seen associated with my home since the housing crisis started). When I asked if this would disqualify me for the HARP program (because they might not technically consider me underwater at this value), they said no – you should be fine. But I’m skeptical that after I pay the mandatory $460 cash closing fee (the other $2540 rolls into the loan), that they would take the $460 and not approve me for the final paperwork.

17 Nov
2011
Posted in: Process
By    Comments Off on 10 HARP Eligibility Facts as of November 11, 2011

10 HARP Eligibility Facts as of November 11, 2011

1. Your loan must have been backed by Fannie Mae or Freddie Mac prior to June 1, 2009.
2. You must have made mortgage payments on time. for the last 6 months, and at least 11 on time in the last year.
3. There is no loan-to-value restriction for fixed rate 30-year loans.
(HARP ARM loans are limited to 105% loan-to-value.)
4. The current loan-to-value (LTV) ratio MUST be greater than 80%.
5. No appraisal is required for the HARP.
6. Your HARP loan can include closing costs.
7. Your income will not be verified by the HARP refinance program unless your new principal + interest payment increases by more than 20 percent.
8. You do not have to refinance through your current lender to apply for HARP.
9. You cannot consolidate mortgages through HARP.
10. If your mortgage has LPMI (Lender-Paid Mortgage Insurance) you are HARP-ineligible.

References:
HARP FAQ
November 2011 : The Complete HARP II Eligibility Requirements

14 Nov
2011
Posted in: Application Assistance, My Ongoing Story
By    Comments Off on Self-Employed Documentation

Self-Employed Documentation

*NOTE: This post will be updated over the next week as I learn more about the process.

When you receive a packet to fill in from your local Community Neighborhood Organization, don’t be alarmed if they send you a packet called Foreclosure Counseling Program. They send this because the information needs are similar, but do call your counselor and ask for the exact list of needs since you will get some clarification on what you need to bring in.

Here is the revised and better articulated checklist of what you need as a self-employed individual applying for HARP Phase II. Use other resources to check against this list, but this will get you started.

1. Call Your Primary Lender

In my case, I am to call Bank of America to see if they will help you with the refinance program. Let them know that you are working with a community neighborhood housing organization to apply for the HARP. The community housing orgs work in tandem with the government and are audited in order to assess the progress of the program, therefore they are good at making sure you have what you need. When lenders know this, it may help you.

2. Check the Estimated Tax & Property Value of Your Home

• check Zillow.com to see your home’s estimated value AND
• find out what your Estimated Tax Value is by going to the website of the county you reside

Here’s an example using my home at it’s current situation (Nov, 2011):
Original Home Value: $206,000 (April, 2005)
Est. Tax Value: $140,000 (see screen shot below)
Zillow: $124,900

3. Gather the Following (Self-Employed)

• 2 years of federal tax returns (profit and loss) with all schedules (1040 ez, etc…)
• year-to-date monthly expenses (monthly profit and loss)
• your latest utility bills (a spreadsheet may be ok if you have one utility bill for address verification)
• homeowner’s insurance statement

*Note: You may not need year-to-date monthly expenses. I was not asked to provide this when Bank of America was ready to refinance me (at a slightly lower rate with $3000 in closing costs — see this post). They indicated that I would only need a CPA to send verification for a few items.)

12 Nov
2011
Posted in: HARP in the Media
By    Comments Off on President Obama Remarks on Jobs and Home Refinancing

President Obama Remarks on Jobs and Home Refinancing

Las Vegas, NV
Monday, October 24, 2011

“President Obama joined homeowners in Nevada to push for changes to the Home Affordable Refinance Program, also known as “HARP.”  The President is asking Freddie Mac and Fannie Mae to loosen HARP restrictions, making it easier for property owners to refinance their home loans”