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What can HARP do for you?

The Federal Reserve says American homes gained $2.3 trillion in value last year, a huge amount and evidence of growing home values. But while news on the real estate front is generally good, an estimated 9.3 million homes remain “deeply underwater” according to RealtyTrac, situations where property values are at least 25 percent less than the outstanding mortgage debt.

If you have an underwater home and if you want to refinance at today’s rates — then you need to look at the government’s Home Affordable Refinance Program.

However, one of the problems with HARP is that it’s somewhat of a moving target. The requirements have evolved, and one result is that many potentially qualified borrowers do not realize the program is now open to them. HARP 1.0 The basic idea behind the 2009 version of HARP — what’s generally known as HARP 1.0 — was to assist borrowers with good payment histories who found they could not refinance because falling home values left them without equity.

HARP was open to borrowers with loans owned by Fannie Mae and Freddie Mac. The loans had to be originated before May 31, 2009, and the borrower had to have a good payment history in the past 12 months.

Another condition was this: The current loan-to-value ratio had to be at least 125 percent, meaning if the house was worth $200,000 the borrower could not have a first loan of more than $250,000. (Originally, the required LTV was 105 percent but this was changed in July 2009.)

The early LTV provisions helped some people but essentially made the program off limits in hard-hit foreclosure centers in California, Florida, Nevada, Arizona and parts of the Rust Belt. In those areas many borrowers had mortgage balances that greatly exceeded the value of their homes and could not qualify for assistance under HARP.

HARP Program

Refinance & Save with the Home Affordable Refinance Program (HARP)

HARP 2.0

 HARP 1.0 not only had LTV problems, it also included requirements that made lenders nervous, especially rules that made them responsible for underwriting errors. As a result, HARP 2.0 was introduced in October 2011, a revision with several important changes.

First, the 125 percent LTV was dropped so that deeply underwater borrowers can get help. Second, borrowers can refinance second homes and investment properties with one-to-four units. Third, borrowers no longer have to work with their existing lender — they can shop around for a HARP refinance.

Lenders also got some goodies to encourage participation: In many cases, automated — and cheaper — appraisals can be used to refinance old loans. Fannie Mae and Freddie Mac will waive “certain representations and warranties” made by lenders, meaning lenders no longer will have liabilities for original loans once refinanced. Lastly, a number of fees and charges were reduced.

HARP 3.0?

There’s no doubt that HARP 2.0 offers benefits to a much larger number of homeowners, but can the program be further improved?

There are, after all, more than 9 million homeowners who remain deeply underwater.

Continue reading by clicking on the link provided below:

By: Miller, Peter G.  “What can HARP do for you?”  04/24/2014.  Web: What can HARP do for you? | | News Transcript.

5 Tips for Refinancing a Mortgage With Bad Credit

Refinancing your mortgage can save you hundreds of dollars a month and potentially tens of thousands of dollars over the life of a standard 30-year home loan.

If you’re nervously watching interest rates rise, and are thinking about refinancing your home, you may have been sitting on the sidelines because you’re worried about your credit. While refinancing a mortgage is no doubt tougher to accomplish when your credit is so-so, or even bad, you can nevertheless get a refi done. Here are five tips to help you refinance your home loan, even if you have blemishes on your credit report.

Tip #1: Don’t Expect Ultra Low Interest Rates

You’ve no doubt seen mortgage advertisements online, in newspapers, or on radio and TV offering homeowners rock-bottom interest rates – sometimes as low as 3% to 4%%.

Well, good luck actually getting a loan at those very low rates, despite all those ads.

According to, as of July 29, the average 30-year fixed rate mortgage was 4.38%. So if you were hoping for record low interest rates in the sub-4% range, those days have passed.

Rates have been rising in recent weeks – especially after the Federal Reserve Bank announced in July that it would stop buying back bonds, a move that had been keeping interest rates artificially low.

There’s another reason, though, that some people shouldn’t be fooled into thinking they’ll get those “teaser” rates that lenders often advertise: It’s that the very best, low interest rate mortgages are reserved for pristine borrowers.

So if your credit is shaky, you can refinance – but just not at the cheapest loan rates available in the marketplace.

Tip #2: You typically need to have equity in your property

In the current environment, most lenders will generally not refinance your existing mortgage if your home is underwater and you owe more on the property than it’s worth.

Even if you’re not underwater, some banks won’t even want to refinance your current mortgage if you only have a little bit of equity in your house.

The reason banks shy away from refinancing properties with little equity is because the new home loan is made based on the current market value of your property.

Without much equity, your loan is seen as “riskier” – and that reduces many lenders’ willingness to issue you a new mortgage.

Also, the more conservative the bank, the greater the amount of equity they will want you to have. For example: very conservative lenders may want you to have 25% to 30% equity in your home for a refi. In other words, they want your loan-to-value or LTV ratio to be 70% to 75%.

If your credit is shaky, you can refinance… just not at the cheapest loan rates available in the marketplace.

In dollar terms, a 75% loan-to-value mortgage means that a lender is willing to lend $300,000 on a property worth $400,000.

Middle-of-the-road lenders will do mortgages with an 80% to 90% loan-to-value.

And aggressive lenders will offer mortgages with a 95% or higher loan-to-value.

Tip #3: Consider Government Insured Loans

All isn’t lost, though, if you don’t have sufficient equity in your home. You can get around that problem, and still get a refinance done.

That’s because lenders doing conventional mortgages are the ones that insist on lots of equity in your property. But that’s not the case for banks offering government-backed loans such as FHA loans, that are insured by agencies like the Department of Housing and Urban Development (HUD).

To refinance a mortgage with an FHA loan, you can have a tiny amount of equity and still get a new mortgage with a LTV limit of 97.75%. So let’s say your property is worth $250,000. With an FHA loan, you can refinance and get a loan up to $244,375, or 97.75% of your home’s value.

Tip #4: Seek an FHA Streamline Refinance

Additionally, if you already have an FHA loan, it’s worth seeking an FHA streamline refinance, which is a special mortgage product reserved only for current FHA borrowers.

For those loan applicants who might not be ideal borrowers on paper, for one reason or another, the FHA streamline refinance has a lot going for it.

For starters, an FHA streamline refinance does not require an appraisal. So right off the bat, you can still qualify for this loan even if you have no equity or your home is underwater.

Continue reading by clicking on the link provided below:

By: Khalfani-Cox, Lynnette.  “5 Tips for Refinancing a Mortgage With Bad Credit.”

EBONY.  07/29/2013.  Web: 5 Tips for Refinancing a Mortgage With Bad Credit – Careers & Finance – EBONY.

Mortgage Purchase Loan, Low Mortgage Rates, Home Refinance, Jumbo Loan Refinance

Underwater Mortgages Drop to 9 Million as Home Prices Rise: Report

Rising home prices are helping pull more distressed borrowers from out of the water, according to the March Mortgage Monitor Report from Lender Processing Services(LPS).

The number of underwater borrowers — those who owed more than their homes were worth — fell 41% from a year earlier. In total, 9 million borrowers or 18% of active mortgages were underwater at the end of March.

In states such as Florida and Nevada, the share of underwater mortgages is 33% and 39% respectively, well above the national average. Still, even these states saw improvements in borrowers’ equity in their mortgages.

The decline in underwater or negative equity mortgages is significant, because borrowers who owe more than their homes are worth tend to default at higher rates as they lose the economic incentive to continue paying their mortgage.

“There has always been a clear correlation between higher levels of negative equity and new problem loan rates,” according to LPS Applied Analytics Senior Vice President Herb Blecher. “Looking at the March data, we see that borrowers with equity are actually outperforming the national average — at 0.6 percent, this group is quite close to pre-crisis norms. The further underwater a borrower gets, the higher those problem rates rise. Borrowers with loan-to-value (LTV) ratios of just 100-110 percent are actually defaulting at more than twice the national average. For those 50 percent or more underwater, we see new problem rates of 4 percent.”

Continue reading by clicking on the link provided below:

By: Bharatwaj, Shanthi.  “Underwater Mortgages Drop to 9 Million as Home Prices Rise: Report.”

TheStreet.  05/06/2013.  Web: Underwater Mortgages Drop to 9 Million as Home Prices Rise: Report – TheStreet.

Sierra Pacific Mortgage, Franco Manueli, HARP Questions, HARP Eligibility

Fannie Mae Turns to Marketing to Increase HARP Awareness

In an attempt to increase public knowledge about the availability of the Home Affordable Refinance Program (HARP) which has just been extended for another 2 years, Fannie Mae has created a selection of marketing materials for its servicers and approved lenders–a move that was announced earlier this month.

The array of postcards, letters, and inserts for monthly mortgage statements come in generic formats or versions that can be customized with a company logo and contact information and personalized with information for the borrower on his specific loan.  Some of the materials allow the user to highlight specific HARP features such as incentives for shorter loan terms or the programs’ availability to high loan-to-value homeowners.

Continue reading by clicking on the link provided below:

By: Swanson, Jann.  “Fannie Mae Turns to Marketing to Increase HARP Awareness.”

Mortgage News Daily.  04/24/2013.  Web: Fannie Mae Turns to Marketing to Increase HARP Awareness.

Find out if a HARP Refinance can help your financial situation:  (855) SWM-LOAN  |

Upside Down, HARP Refinance, Investment Properties, Sierra Pacific Mortgage, Franco Manueli

HARP Refinancing is good for Primary & Investment Homes!

Fee-laden FHA mortgages cost more than privately insured loans

The lending landscape shifted measurably this month when the standard-bearer for first-time buyers and low-to-moderate income borrowers became more expensive than its private business counterpart.

On April 1, fees for low-down-payment mortgages insured by the Federal Housing Administration rose for the third time in two years. The hike in fees serves a twofold purpose: to help shore up the FHA’s sagging mortgage insurance fund, which is dangerously low; and to reduce the government’s footprint in the mortgage market.

Only time will tell whether the first objective will be reached. But the second goal — allowing private mortgage insurance companies to gain a larger market share — probably will be met because PMI is now the less expensive alternative.

How much less expensive? Over a five-year period, borrowers with a 760 FICO score who make a 5% down payment on a 30-year, $170,000 mortgage could save more than $4,000 by opting for a loan insured by Genworth Financial, one of six private mortgage insurers.

Of course, most folks don’t have credit scores that high. But for nearly all borrowers who can come up with a down payment of at least 3.5% on a loan of up to $625,000, PMI is now probably the better deal.

The FHA has always been the first choice of borrowers with low down payments who couldn’t meet the private sector’s more rigid underwriting standards. And during the housing debacle, the agency picked up the slack as private insurers backed out of the market. A couple of companies even went out of business altogether.

But the FHA paid dearly for its efforts in supporting the market. Foreclosures are up significantly, and the health of the insurance fund from which claims are paid is at or below the level required by Congress.

So, as of April 1, the agency raised its annual premium by 0.05 percentage point to 0.1%, depending on the loan amount and the all-important loan-to-value ratio. That’s on top of an earlier 0.1 percentage point increase in the annual fee instituted last April, as well as the hike in the upfront mortgage insurance premium, to 1.75% of the loan amount from 1%.

As a result, the choice between mortgages with private mortgage insurance and those insured by Uncle Sam has never been clearer.

Lenders require insurance, either private or government-based, on mortgages in which there is a down payment of less than 20%. Such loans are considered more likely to default than those in which borrowers have more of their own money on the line.

Continue reading by clicking on the link provided below:

By: Sichelman, Lew.  “Fee-laden FHA mortgages cost more than privately insured loans.”  04/19/2013.  Web: Fee-laden FHA mortgages cost more than privately insured loans –

Need help choosing the right loan program?  We’re here to help!  (855) SWM-LOAN  |

FHA Premiums, Sierra Pacific Mortgage, Franco Manueli, FHA Financing

HARP Continues to Attract Seriously Underwater Borrowers

Freddie Mac and Fannie Mae (the GSEs) refinanced a total of 97,589 mortgages through the Home Affordable Refinance Program (HARP) in January compared to 76,460 HARP refinances in December.  Fannie Mae participated in 62,519 of the transactions and Freddie Mac in 35,070.  HARP loans represented 21 percent of the 469,953 refinance actions completed by the GSEs during the month.  Total refinances in January exceeded those in December by nearly 110,000 and January was second only to November in the level of overall refinancing activity in the previous 12 month period.

Since HARP was first begun in 2009 2.26 million homeowners have been assisted in refinancing through the program.  HARP was designed for homeowners who were unable to refinance through traditional means because they owned more on their existing Fannie Mae or Freddie Mac loans than the market value of the collateral property.  At the beginning HAMP would fund loans with up to 105 percent loan-to-value (LTV) ratio, later raised to 125 percent.  In the fall of 2011 significant revisions were made to the program including removing all limits on LTV.  Since that time the number of homeowners served through HARP has nearly doubled.

Borrowers with loan-to-value ratios greater than 105 percent accounted for 47 percent of the volume of HARP loans in January while 25 percent were loans with LTVs exceeding 125 percent.

Continue reading by clicking on the link provided below:

By: Swanson, Jann.  “HARP Continues to Attract Seriously Underwater Borrowers.”

Mortgage News Daily.  04/09/2013.  Web: HARP Continues to Attract Seriously Underwater Borrowers

HARP Refinance your Investment Properties, too!  Call for a free quote on how much you could be saving.  (855) SWM-LOAN  |

Upside Down, HARP Refinance, Investment Properties, Sierra Pacific Mortgage, Franco Manueli

HARP Refinancing is good for Primary & Investment Homes!

Rising Prices Slowly Eroding National Negative Equity

Rising home prices lifted 200,000 homes into a positive equity position in the fourth quarter of 2012.  A total of 1.7 million homes regained equity during 2012 according to CoreLogic’s negative equity report released on Tuesday.  There are now 38.1 million homes with mortgages that now have positive equity nationwide while 10.4 million or 21.5 percent of all properties with a mortgage remain in negative territory.  Another 11.3 million or 23.2 percent have equity but at a rate below 20 percent.

CoreLogic said that 1.8 million of the underwater homeowners have a loan to value ratio between 100 and 105 percent.  Should home prices increase another 5 percent these “near equity” homeowners would be back in a positive equity position.   There were 4.4 million properties or 9.1 percent with LTVs exceeding 125 percent in the fourth quarter.

The national aggregate negative equity decreased from $670 billion at the end of the third quarter to $628 billion at the end of the fourth quarter of 2012.  At the end of the fourth quarter of 2011 the aggregate negative equity was $743 billion.

There were 6.5 million borrowers with negative equity and only a senior lien in the fourth quarter while 3.9 million borrowers had both first mortgages and home equity loans but the $628 in negative equity was almost evenly divided between the two groups.   The average mortgage balance for homeowners with only one lien was $213,000 and the average underwater amount was $45,000.  Those homeowners with both first and second mortgages had balances averaging $296,000 and were underwater an average of $80,000.

The bulk of equity is concentrated in the high end of the housing market.  Eight-six percent of homes valued at more than $200,000 have equity compared to 72 percent of homes valued below that level.

Anand Nallathambi, president and CEO of CoreLogic said, “The scourge of negative equity continues to recede across the country.  There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen.  The trend toward more homeowners moving back into positive equity territory should continue in 2013.”

Continue reading by clicking on the link provided below:

By: Swanson, Jann.  “Rising Prices Slowly Eroding National Negative Equity.”

Mortgage News Daily.  03/19/2013.  Web: Rising Prices Slowly Eroding National Negative Equity.

FHA Streamline, FHA Homeowners, Underwater, Home Value, Refinance

HARP 2.0 Reaches 1 Million Milestone

Just a little over a year after the Home Affordable Refinance Program (HARP) was substantially revised into HARP 2.0 it has reached nearly as many homeowners as in the two-and-a-half years that preceded the revisions.  In November 2012 nearly 130,000 homeowners refinanced through HARP, bringing the total transactions through the program since its inception in April 2009 to 2.09 million. About 1.04 million of these have occurred since HARP 2.0 became effective in December 2011.

In November Fannie Mae refinanced 77,301 home mortgages through HARP, 22 percent of all refinancing it did that month and Freddie Mac had 52,445 HARP refinances or 23.4 percent.

The revisions to HARP removed the existing 125 percent cap on loan-to-value ratios.  About one fifth of the loans refinanced since that time have had LTV ratios above 125 percent.  In November, 46 percent of the loans refinanced through HARP had loan-to-value (LTV) ratios greater than 105 percent and 24 percent had LTVs greater than 125 percent.

Utilization of HARP is especially high in some of the states hardest hit by price declines and foreclosures.  In Nevada, for example, HARP accounted for 68 percent of total refinancing, nearly triple the national average of 23 percent and in Florida 56 percent of refinances were through HARP.

Continue reading by clicking on the link provided below:

Swanson, Jann.  “HARP 2.0 Reaches 1 Million Milestone.”

Mortgage News Daily.  02/19/2013.  Web:  HARP 2.0 Reaches 1 Million Milestone.

Interesting in a HARP Refinance?  Call us to find out more!  (855) SWM-LOAN  |

Restructured HARP helping more underwater homeowners to refinance

In the Sacramento area, about 180,000 households, or roughly half of all homeowners with mortgages, owe more than their homes are worth.

Many are stuck paying higher interest rates than today’s ultra-low average of about 3.5 percent on a 30-year loan.

For these families, refinancing to a lower rate would free up cash in a tough economy and help them stay in their houses. Yet until recently, large numbers of homeowners were shut out from refinancing because they owed far more than their homes are worth.

Today, a reworked federal effort called the Home Affordable Refinance Program, or HARP, is helping thousands more refinance, even if they’re deeply underwater on their mortgages.

The HARP restructuring – known as HARP 2.0 – took effect late last year and opened the floodgates for those who had been blocked from refinancing under an earlier, more-restrictive version of the program.

Through July, about 75,000 California homeowners had refinanced under HARP – roughly 25,000 more than the number that refinanced under the program during all of 2011.

“A lot of those folks had already applied for HARP and been declined,” said Tai Mamea, vice president for mortgage lending at Chase bank. “Sometimes they’ve been waiting for years.”

Chase customers have saved an average of $300 a month by refinancing through HARP, often halving their interest rates, he said.

But HARP 2.0, as it’s known, isn’t the cure-all that some predicted. For some homeowners, frustrations and roadblocks remain.

“I’ve helped lots of families refinance with HARP,” said Brent Wilson, a loan strategist with Comstock Mortgage in Sacramento. “But I still see a huge void of folks upside-down on loans who can’t refinance with HARP.”

A major reason, he said, is that their loans aren’t backed by mortgage giants Freddie Mac or Fannie Mae, a requirement for HARP refinancing. Being up-to-date on mortgage payments is another prerequisite.

Others might have low credit scores or high debt-to-income ratios, or they may lack cash reserves. Depending on the rules of individual lenders, such factors can prevent homeowners from successfully refinancing under HARP, Wilson said.

“You still have to be able to qualify,” he said. “It’s not as clear-cut as some people make it sound.”

Still, federal officials cleared away one of the biggest hurdles, he said.

The original version of HARP, introduced in 2009, allowed a loan-to-value ratio up to 125 percent. To be eligible, homeowners could only owe 25 percent more than their homes were worth. In other words, they could only be slightly underwater.

Many in the Sacramento region have sunk much deeper. One out of five of the region’s homeowners owe at least twice what their home is worth, according to online real estate tracking firm Zillow.

It’s a situation that’s common in other areas of California and in regions of the country – including Florida, Arizona and parts of the Northeast – that experienced a spike in housing prices followed by a calamitous free fall.

That’s why federal authorities restructured HARP so that it lets homeowners refinance regardless of the difference between loan amounts and home values.

Some lenders, however, have their own criteria that they layer on top of the HARP rules, experts said. They can impose loan-to-value caps of 105 percent or 150 percent.

But HARP 2.0 also gives borrowers more freedom to shop around if their current loan servicer won’t help, and mortgage experts say trying different lenders can be a useful strategy.

Continue reading by clicking on the link provided below:

By: Sangree, Hudson & Reese, Phillip.  “Restructured HARP helping more underwater homeowners to refinance.”  10/21/2012.  Web:  Restructured HARP helping more underwater homeowners to refinance – Around the valley –

Attention California, Arizona & Nevada homeowners: Shop for a better HARP 2.0 Refinance Rate!  (855) SWM-LOAN  |


Fed Study Points to Wisdom of Further HARP Enhancements


Economists have been debating the value versus risk of expanded refinancing opportunities since the early days of the housing crisis. Proponents argue that refinancing would free up homeowner money for spending elsewhere to the benefit of the economy, opponents fear that since the Federal Housing Administration and the government sponsored enterprises (GSEs) are realistically the only source of refinancing currently available, any risk inherent in refinancing will disproportionately fall the government.

To clarify an issue that is of interest to homeowners, policy makers, and taxpayers, the Federal Reserve Bank of New York has just published a report, Payment Changes and Default Risk:  The Impact of Refinancing on Expected Credit Losses by staff members Joshua Abel, Joseph Tracy, and Joshua Wright that looked at whether refinancing lowers the risk of default.

Earlier studies have looked at defaults after loan modifications which reduce rates and/or payments.  One study found that for a sample of modifications to securitized subprime mortgages a 10 percent reduction in the monthly payment was associated with a 4.5 percentage point reduction in the 12-month redefault rate.

Extrapolating earlier studies to suggest that expanding the government’s Home Affordable Refinance Program might result in lower defaults is suspect because the one study mentioned concerned only subprime borrowers while HARP involves prime borrowers with much stronger initial credit profiles and those borrowers who were given modifications were already seriously delinquent while HARP requires homeowners to be current with a relatively clean payment history over the previous 12 months.

The ideal study would link together the prior mortgage with the HARP-refinanced mortgage so that one could measure the percent reduction in the monthly payment and estimate how HARP impacts the likelihood that the borrower will default on the refinanced mortgage. With such a linked HARP mortgage data set, one could control for other important factors, such as the borrower’s updated loan-to-value (LTV) ratio, when estimating the impact of the payment change on the default risk. However, no such linked data set on HARP-refinanced mortgages exists, making it difficult to estimate the effect of lower monthly payments on the population of HARP-eligible borrowers.

The New York Fed study approached the issue by studying the impact of refinancing adjustable rate mortgages (ARMs).  While these are significantly less common than fixed rate mortgages, this methodology provided some advantages for estimating the impact of refinancing on fixed-rate borrowers such as allowing the researchers to compare similar borrowers in terms of their credit profiles when their mortgages were originated.  As rates have dropped, the rate resets on many ARMS resulted in lower monthly mortgages payments, mimicking refinances, and the percentage reduction in the mortgage payment from origination date to the most recent reset date can be used to help explain subsequent default behavior by the borrower.  This approach also addresses the issue of pre-existing delinquency raised by using mortgage modifications in a study.

The authors used a sample of over 173,000 prime ARMS originated since 2003 and on which there were an aggregate of 6.5 million monthly payments and controlled for a number of factors that might affect a default rate such as the original FICO score, the updated LTV ratio, employment data, and home price changes.

Focusing on borrowers with an updated LTV of 80 or higher who would be candidates for refinancing under the HARP program, the authors found that a 26 percent reduction in the monthly mortgage payment, which they estimated would be the average reduction through a HARP refinancing, would result in a 3.8 percentage point reduction in the five-year cumulative default rate. Combining this with an estimate of the likely losses given a default on these mortgages, the results indicate that borrowers who refinance under HARP have an estimated reduction in projected credit losses of 134 basis points, or for every billion dollars in agency mortgage balances that refinance through an improved HARP, the estimated reduction in credit losses would be $134 million. This reduction would primarily benefit taxpayers, although private insurers of the underlying mortgages would also receive some benefit.

Continue reading by clicking on the link provided below:

By: Swanson, Jann.  “Fed Study Points to Wisdom of Further HARP Enhancements.”
Mortgage News Daily.  9/28/2012.  Web:  Fed Study Points to Wisdom of Further HARP Enhancements.

HARP Refinance available here.  Call or click for eligibility requirements: (855) SWM-LOAN  |



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