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Effective today my national lender announced the release of the Fannie Mae Refi Plus Program. This program was part of the Home Affordable Modification Program release that was as a result of President Obama’s Stimulus Foreclosure Prevention.
A borrower who faces issues when attempting to refinance due to declining home prices or unavailability of mortgage programs can possibly refinance and take advantage of today’s low interest rates. Most program cut backs are due to PMI being unavailable or default rates on less than perfect credit borrowers.
To check and see if your current mortgage is a Fannie Mae loan click: Fannie Mae Loan Lookup
The program allows up to 105% LTV and there is no maximum CLTV. All existing subordinate financing (2nd Mortgages) must subordinate to the new loan. Please contact your existing 2nd Mortgage Lender and request a subordination package to find out if they will comply.
There is no minimum credit score. You can retain your original PMI (This is great because the PMI rates increased).
This gives you an idea of the program and how it works. If you have any questions submit a comment.
Update: Fannie Mae has announced expansion up to 125% LTV on the program.
[...] A mortgage servicer will no longer be able to initiate foreclosure without completing mitigation provisions in the title II of this act and they must use the Homeowner Affordability and Stability Plan. [...]
I was talking to my loan servicer (Bank of America) about this program. According to makinghomeaffordable.gov web site my loan is eligible for refinancing. But a loan officer from Bank of America told me that they can’t refinance the loan because we have PMI.
Could you please clarify the issue for me – is the officer right? Can a loan servicer set up their own requirements on top of government’s ones? Are we actually out of luck with refinancing? Thanks in advance!
It is important that people understand how loans work on the inside. Entities such as Fannie Mae, Freddy Mac, FHA, VA, USDA, and so on are the investors who either guarantee or insure the loans. They establish a minimum set of guidelines. A mortgagee can also establish their own set of guidelines. Under this particular program the current MI certificate could be transferred to the new loan. Most of the lenders I work with state the PMI companies are willing to do this since the new loan posses a lower risk of default due to the lower rate and payment. I suggest you shop around as the program is widely available with most wholesale mortgage brokers and what we call super brokers who use multiple lenders under a correspondent/banker relationship. You can always try the large banking companies but they are typically isolated to their products only so you have a lower probability of being approved with them.
Thank’s Greg… B of A told me exactly the same thing and stated that there was nothing they were willing to do! I will definately go elsewhere.
You’re welcome. I hope you can find someone willing to help.
I have seen some searches for the minimum credit score on this program. Most lenders require a 580 credit score despite Fannie Mae not imposing a minimum score requirement.
My question with HARP is that, why is it taking so long for my loan to be reviwed? I live in northern california, my mortage consultant tells me that the HARP program is very impacted, thus it is taking a long time. Not sure if this is really the hold up? My loan has been approved, though not reviwed?
The HARP program takes the same amount of time as any other conventional loan. Wholesale lenders are backlogged on underwriting files. Some are reporting a 30 day time frame from loan submission to underwriting review.
In other words conventional loans have an extended closing time due to the recent increase in loan volume. This happened because many folks refinanced their loans to take advantage of the 4% rates we had for a few months. Those time frames should improve as rates have increased and demand is slowing down for refinances.
The government is said to be expanding this program through Fannie Mae and Freddy Mac to allow a higher Loan To Value. They are also claiming the program will still allow substantial interest rate reductions.
Details have not yet been announced.
Fishing In A Goldfish Bowl,…
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I have question regarding the HARP program: I applied for the loan mod program under the HOPE program and did not qualify due to the 1st loan is below the DTI threshold of 31%. However, with this new HARP program, do I qualify for a refinance? I have a first & second with the same lender and the house is upside down.
Bill, it depends on several factors that require me to ask detailed questions about you that I am not sure you would wan to share on a public venue. But, here is what I would need to know:
What is the address of the property?
Do you have all 3 credit scores?
How much do you owe?
What was the last appriased value of the home?
What lender services your current mortgage?
Bill, have you checked to see if your loan is held by Fannie Mae? There is a link in this article to see whether it is or not.
Hello,My house is in Panama City Florida. I bought the home in 2007. Price 390,000.00. I paid 40,000 down. The initial loan was originated through countrywide (but backed by Fannie Mae). The loan officer made two interest only loans to keep me from paying PMI. I told her that I could not pay more than 2,000. since that time my loan has risen to 2450.00 a month ( the house was not showing on the property at the beginning). My credit score is over 700. I would like to combine the two loans with a fixed rate. My interest rate is 6.5%. I have tried to work with Bank of America that has my loan but they do not seem to be giving me any real deal. What do I need to do?
What do you feel the value of the home is now? 6.5% certaintly is higher than the current market rate.
can you tell me one mortgage company that are doing refi if you have pmi because i can’t find one thanks.
Try your current servicer. If they do not then try Bank of America.
bank of america will not do it if you have PMI
Can you tell me how long after an offer is taken or accepted by the “listing agent” selling a REO property from “Fannie Mae” so far we know the listing agent has forward the contract to Fannie Mae’s office almost 25 day passed and no response, is there any time frame? I had apply using FHA with wells fargo, all this documents were send. thank you
As long as it takes for them to respond. It can be a week to a month normally.
called citimortgage wanted to refinance my loan and second mortgage together to save money and they will not be able to because our manufactured home on 2.5 acres is not worth what we owe so what do we do?
What type of mortgage do you have now? What type of mortgage were they trying to give you?
What was the appraised value? What is the balance of both mortgages?
The information requested above is for a more precise answer. Some people are in the same situation as you. What you could try is refinancing only the first mortgage and requesting that your second mortgage holder subordinate their lien to your newly refinanced mortgage. FHA allows an unlimted CLTV which means the 2nd mortgage can be over and above the appraised value of the home.
Do you know if Fannie Mae will accept a refi under the HARP program if you have an expanded approval loan?
Do you know if I’m able to fold my existing line of credit debt into a HARP loan?
No you cannot. You would have to have the 2nd subordinate to the new HARP loan.
Hi
I am trying to refi my loan with Bank of America (my current rate is 5.125, 30 year fixed and i locked in the rate for a 30 year refi when it went down to 4.625.) However, after a few days of processing,Bofa said that I am not eligible for the HASP but can go for the traditinal refi. Problem is my home value has gone down and mhy ltv stands at 88.5 for the new loan, I do not have a second mortgage, never defaulted. Do you know what makes me ineligible under HASP?
No lender approves HARP refinancing with PMI as far as I know. I personally know BoA doesnt. This is because the lender (BoA for example) can make more if you default on the insured loan than if they re-do it. There is a clause in the HARP that basically states they don’t have to. It is really up to the MI company if they want to transfer the policy to the new loan, but of coarse they are not bound by HARP. Once again we have a great government concept that applies to very very few and is filled with red tape. Do you really think BoA cares about a $1000 bonus??
Tell me if this is correct:
Here’s the reference from the Home Affordable Modification Program Guidelines:
“For loans that have mortgage insurance (MI) coverage, the NPV Test will incorporate the value of the contingent claim payment in the event of default when evaluating projected foreclosure or modification scenarios. If the modification does not pass the NPV Test, then it will be referred to the appropriate MI company. The major MI companies have agreed to develop a mechanism by which they will pay partial claims where they deem appropriate to avoid foreclosure.”
The NPV test basically compares (1) how much the bank would get if a borrower goes into foreclosure with (2) how much the bank would get if they modify a loan. If the NPV test reveals that the bank would make more money by modifying the loan, then the bank has to modify.
To illustrate a scenario in which the NPV test would be “positive”, think of a borrower who owes $500,000 on a home that is now worth $300,000. If the bank lets the house go into foreclosure, it would only get $300,000, but if the bank modifies the loan, it would be able to keep collecting payments, and would not lose $200,000 in a foreclosure sale. So, it makes sense for the bank to modify.
I think that makes perfect sense. I wish I knew someone on the servicing side we could get input from.
Yeah you are right. No one is approving loans that have PMI on them except the current servicer of the loan. I really have not looked into why but I assume it is a Fannie Mae condition for the program. They do not want to lose insurance when the current servicer can in most cases transfer the insurance or a portion of it to the new loan.
By not allowing anyone but the current servicer to refinance insured loans they reduce their risk for loss on the loan if the borrower defaults.
I should probably mention that loans that had LPMI (Lender Paid Mortgage Insurance) usually are not able to qualify for this program at all. This type of PMI is somewhat rare. It means your lender paid an up front premium or lump sum to insure the loan. In many cases these policies cannot be re-issued on new loans and since it is technically an insured loan they are not able to be refinanced with other lenders either.
Hi.
I recently started the process of refinancing through the Making Home Affordable program. I orginally had 15% equity in my home but now it’s decreased due to falling home prices, which would make it impossible to take advantage of lower interest rates if not for this program. I ran into some trouble, though, when my lender sent me the good faith estimate and some other documents for review. One of the documents was a Federal Notice of PMI, and it stated that the end date of my PMI payments would be 2022 rather than the current end date, 2014. Over the phone, the loan officer had assured me that this would not happen- that PMI was merely “transferred” in this kind of refi and not increased- but the documents indicate otherwise. At $60 a month, that’s about a $6,0000 difference, which obviously affects the cost/benefit analysis of refinancing! When I called him to discuss, he said that he is no longer sure what the process is for PMI, he talked to a variety of other people at the bank who didn’t know, and he said “no one here knows.” (Which is kind of scary!) What’s the right answer to this question- is the PMI “clock” reset by a refi like this or is PMI totally unaffected? And how do I get my lender to follow the rules if this type of refi does, in fact, leave PMI untouched? Is there any way to find out which PMI company insures my loan and find out from them what their policy is on this? (Is it them- the PMI company- that would decide this, or is it my bank?)
Thanks,
Ryan
You are on the right track. Sorry for the tardy response. The reason your PMI is extended is because the balance of your mortgage will increase on the refinance and cause you to reach 78% of your last appraised value (if the loan your refinancing was used to refinance) or the purchase price (if it was used to purchase the home) at a later date than your original loan. I cannot beleive they could not figure this out!
Since doing nothing at all means you make the same payment…
You should do an amortization with taking the refiniance and paying your current payment to see when your loan would go below 78%. Chances are it would be sooner than your current situation and pay off the loan faster saving you a nice chunk of cash!
Under HARP are escrowing either taxes or insurance required? some lenders are telling me yes and others are saying no. I cna find no info on the web. thanks
It is up to the lender offering the program to decide. Usually you can have an option to waive escrows if your LTV is under 80%.
I’m trying to refinance an investment property under HARP. Our LTV is 108% and we have PMI. Our current servicer will do it at 105%, leaving $15K cash due at closing. I could borrow the $15K but we don’t have it out-of-pocket. The refi would reduce my rate from 6.5% to 5.5%, i.e., would lower the payments by approx. $250 per month. Although we have a renter in the property, we still pay $1000 per month to make the mortgage. After the refi, we’d be out $15K and still owing $750 each month. Is this refi worth it? At this point, I’m thinking short sale. Any thoughts?
How much is the $15,000 going to cost you to borrow? Are you including that cost in the $250 per month savings?
Sure, $250 is a great deal of money, especially when finances are tight, or, to be applied toward principle to reduce the debt more quickly.
I am going to agree with you based on what information you have given though. Why continue to pay 1000 or 750 on a failing investment. However, it depends on when it could sell and what short sale options would be made available to help it sell.
I have been trying to re-fi for a while. Originally a stated income loan with BOA. My DI is 65%. HARP tried to help me. I qualified perfectly then learned I have LPMI. Are there any hopes of a modification? I am current and always have been but it’s a very tight budget to say the least. I have great credit scores and don’t want to have my scores affected. My questions are: 1) Does BOA have to help me? 2) How do I protect my credit scores?
I do not know of any refinance options and no, BOA does not have to help you. Your best bet is to ask for a modification.
I am not sure what advice to give you on protecting your credit scores. I would need to see you credit report. Is there anything more specific you want to ask about credit scores?
Thanks for providing this information. I badly need a loan to save my house from foreclosure. I’ll try if I would be able to qualify.
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Nicole, expanded approval loans are eligible for the program.
Today I was told that our loan application would be turned down for a refi with Quicken Loans due to PMI that use to be on the loan. We had refinanced back in 2008 into a convt. loan that didn’t require PMI and it is not on the current loan. But because we use to have PMI we were denied. We have great credit and everything was going great and we were qualified for the HARP program until this old PMI came up. Is it because our loan now is a conventional loan? Do we have any hope of finding some other lender to refinance our mortgage? I am paying 6.25% (30yr fixed) and was going to be able to get a 4.99% no cost refinance with Quicken…. until the PMI issue. Thanks!
The decision would be based on the loan you are currently trying to refinance. It would not be retroactive back to any prior loans.
The loan you currently have might have been subject to PMI, but rather than require you to pay a monthly premium, the lender who closed the loan might have paid a one time premium at closing instead. This one time fee also could have been charged to you and paid by you at the time of the refinance. The proper terms for this type of PMI is LPMI (Lender Paid Mortgage Insurance) or BPMI (Borrower Paid Mortgage Insurance).
The only way I would be able to tell is if I had a copy of your HUD settlement statement from the 2008 loan closing. You should contact your current loan servicer and ask them if either one of these situations applied to your loan. If so, they can refinance your loan if they have the program and they would be the ONLY lender who could.
Just one more point of clarification. Did you ever pay a monthly PMI fee after your 2008 loan closed? If you did, LPMI and BPMI were likely not utilized and Quicken is mistaken and should be able to refinance your loan as long as you are not paying a premium now.
There is one more type of PMI that could disqualify you and it is called Split Premium PMI. It is a combination of an up front premium and a monthly premium.
Greg – As usual not only are your posts helpful and educational, your responses to visitors questions are equally helpful. I learned a great deal just but reading the questions of others as well as your responses.
Cheers and thanks!!!
Thank you Lisa.
Greg,
I am in the process of trying to refinance my home. I initially bought a condo in NJ where i lived but moved out to California since then. I have bought another condo out here in California last year and now own two condos. The condo I have back in Jersey is occupied by my parents and I pay the mortgage monthly. My existing lender for the New Jersey property I want to refinance is BofA. Do I qualify for the HARP program? I spoke to a loan officer and they are saying that because it is no longer owner occupied I cannot do a HARP. Let me know what you think.
Technically, the HARP program allows you to refinance Non-Owner Occupied properties, but most investors are not buying these loans. I do not know of a single one that is. So, Fannie Mae guidelines allow it, but no lenders/invetors want to do them.
I have an FHA mortgage at 4.875% from March 2010. I tried to take advantage of the lower rates and looked into refinancing at 4.0%. However my PMI would increase from $159 to $320+ per month erasing any benefit. my credit is in the 780′s. Any options? . Good info on your site. Thank you
I can only lend on properties located in Ohio. If your property is in Ohio, please email me the following at greg@businesswithgreg.com:
1) Your property address.
2) Your current loan balance.
3) Your current monthly payment broken down into principle and interest, MI, home insurance, and property taxes.
I will see if it appears anything will benefit you. The new MI changes make FHA loans drastically more expensive as you can see.
I have been qualified for the fanie may plus refinance program but when we talked to our existing mortage company (Nationstar Mortgage) they said that they would not refinance us because our debt to income was to high, and that they would not help us but the other company that we talked to told us that we qualify for the program but they cant refinance us becuase our mortage has a pmi on our loan what are my options?
The only suggestion I have to lower your interest rate would be asking your existing mortgage servicer for a loan modification. What the 2nd lender probably meant was your loan is owned by Fannie Mae which makes you eligible, but you still need to meet debt to income ratio requirements. As discussed previously in this post, you can only do the program with the existing servicer if you had PMI.
Do you know if any of the recent updates to the HARP program are going to make exceptions for PMI based loans? I have been trying to qualify for a refinance through my lender, but they continue to say that I am not eligible because PMI is non-transferable. I am just crossing my fingers that the new guidelines will change this obstacle. I have excellent credit and have been paying faithfully on my mortgage each month. The value of my home has dropped but is still within the 125% guidelines for refinance.
I was told that through this new program that the PMI that I currently pay would go away if i refinance with this new HARP program. Is there any truth to this?
Dear Greg,
We own a home in California. We have a second mortage. We tried to apply for all the programs but do not qualifiy. We can afford paying our home and we do not have hardship. Our mortage loans are not a Fanny Mae or Freddie Mac. Our current lender or bank is E-Trade. My questions is can we switch our mortage loans to Fanny Mae or Freddie Mac? Thank you for your advise.
I have not researched any changes to the HARP program for quite some time. I know the program was extended, but I am not sure if people who pay PMI can now take advantage through any lender or if PMI falls off entirely.
Delores, I would say that you are out of options. You cannot switch your loan to either. E-Trade would have to sell the loan to them, and even if they did, it is after the eligibility period for the program.
I will slate some time to research the changes and post an update.
For the time being, click this link for help.
http://www.makinghomeaffordable.gov/pages/default.aspx
Also, here is Fannie Mae’s FAQ’s that should be updated for the program. Please remember, investors can make guidelines more strict than Fannie Mae’s minimum guidelines. For example, 125% LTV is ok with Fannie Mae, but almost all lenders cut it to 105-115% Max.
https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf
Greg, I am excited about this new HARP program as I am at around 125% LTV, are you saying that I am probably wasting my time, that any lender will probably avoid me like the plague even with the supposed new rules (which are not really all outlined in the 11/15 release) regarding reps and warranties, basically reducing the bank’s risk? Shouldn’t these lenders now be willing to go up to 125%?
I am cautiously excited. Bought in 2005, we have perfect credit, never missed a payment, Fannie holds the loan, employed with income, and we are way underwater and would love to get a lower payment. I am wary though for the exact reason you state. With the PMI on our loan and the high LTV, I still have my doubts that any lender will do it, even though I feel we are an ideal candidate. I also hate that I have a 3rd party servicer we have to make out payments to, who is really of no help at all for information. From what I understand, I really can’t begin to start asking banks until around Feb 2012.
Do you feel banks will be willing to consider us under this new program, or am I likely to get a reality check due to the still high LTV?