HARP 2.0 - here we go again? I hope not.
For our office this week was a state of confusion in regard to the new HARP 2.0 loans. The feed back so far is that Fannie Mae is for real but Freddie Mac is difficult if not impossible. We have had approvals this week but we have also been disappointed for some of our customers because they were not approved even though they met the Fannie/Freddie Guidelines.
The guidelines are that if the customer has paid the mortgage as agreed for the past 6 months and has no more than one 30 day late within the past 12 months and if the loan is owned by Fannie or Freddie then that customer qualifies to refinance. But we are already finding that credit issues are considered and that income is considered.
Here is the program in a nutshell. If the customers mortgage is owned by Fannie or Freddie and has been owned by one of them since June 2009 and if the customer has paid the mortgage on time then the program is to allow the customer to refinance and lower his/her mortgage payment.
We had one customer turned down this week with these criteria: 800+ credit score that's excellent. The loan to value is 122% that qualifies - the new program is to have no limit. And, the debt ratio is 41% -that is excellent under every mortgage loan program. Yet, the customer was turned down because the customer has three credit cards where the balance is more than 50% of the limit. If the limit is $10,000 and the customer has a balance of $5200 - that was the reason for the turn down.
That guideline is not written anywhere. Fannie and Freddie have their guidelines and all the banks have different guidelines. This week was for us a week of confusion and disappointment. I hope the confusion clears quickly and that this becomes a viable program for those who want to refinance and lower their mortgage payments.
Doug Jones
Mortgage Magic NMLS 286668
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