Well not exactly.... What I mean is that as rates rise Lenders are looking for ways to keep their pipelines full with loans, so how do they achieve this? Remove the overlay. At face value the HARP Program is a great program for responsible homeowners who have been paying their mortgages on time but cannot refinance their loan in most cases because their home is “underwater” this loan would allow those homeowners to refinance their underwater homes allowing them to take advantage of the historically low rates.
Sounds easy enough right well it depends on who you speak to. When the program came out in its raw form Lenders instituted overlays to the product which essentially is another set of guidelines if you will that they follow in order to underwrite and approve a loan. Example when HARP came out the credit requirement was a 580 score Lenders thought that was a bit low so they added an overlay that said they would not approve a HARP loan with a credit score under a 640 that is an over lay.
So in short the program was overlaid to death and was not able to help as many people as the program was intended to. Fast forward to today, Lenders are not getting as many loan applications in due to rates rising and the slowing refinance market so what is their answer?
REMOVE THE OVERLAY …….
This opens up a new group of people that were not able to refinance due to the overlays to take advantage of the HARP program in its raw form. Here are a few of the highlights.
Minimum Credit Score 580
Unlimited Loan To Value
Expanded Debt to Income Ratios
Loans with Lender Paid Mortgage Insurance
Investment Homes Now Qualify
This program is now in full force in the form it was intended to be used and I hope more homeowners will revisit this program again even if they have been turned down before. You never can tell you just may qualify and could potentially save hundreds of dollars a month.