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March 2nd, 2010

Update1: HARP Receives One Year Extension — What’s the Point?

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Update1: While many industry insiders have debated the success of the home affordable refinance program (HARP) — in fact, analysts at Barclays Capital referred to the program as a “failure” last week — one thing’s for sure, HARP will be extended another year. The expiration date is now slated for June 30, 2011.

According to the National Association of Realtors, “Since HARP began last April, it has refinanced 190,180 mortgages.” That’s a far cry from helping the 4-5 million homeowners that the program originally promised.

HARP was designed to cater to underwater homeowners who couldn’t qualify for private-market refinances due to their minimal or negative equity position.

With such little success, why extend the program any longer?

“[Federal Housing Finance Agency] FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said DeMarco. “Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011.”

Beyond unchanged market conditions, beyond the fact that swaths of underwater borrowers still exist, there are several fundamental reasons why borrowers aren’t refinancing and can’t refinance at the pace Washington had hoped.

Our friend Nick Timiraos at the Wall Street Journal explains that there are simple and fundamental roadblocks that are preventing more refinances (emphasis added):

Falling home prices have left many owners with little or no equity, making it harder to qualify for refinancing. Moreover, stricter lending standards and higher fees by banks and mortgage giants Fannie Mae and Freddie Mac and declining incomes have made it tougher and less attractive for borrowers to seek new loans.

In addition to these, small loan balances and job losses (a two-income home become a one-income home) are also reasons people don’t refinance.  Separately, on the surface it’s perplexing why more borrowers haven’t refinanced to historically-low mortgage rates, given the potential for substantial savings. History proves that rock-bottom rates are the main force behind past refi booms:

One indicator of the economic impact of refinancing: Loans that refinanced in 2009 will result in $3.4 billion in savings for consumers this year, according to a report by First American CoreLogic, a research firm based in Santa Ana, Calif. That will return an additional $17.2 billion in savings to borrowers over the next five years.

The last time mortgage rates were at current levels, in 2003, refinancing activity hit $2.9 trillion, according to trade publication Inside Mortgage Finance. Last year, refinance volume reached $1.2 trillion, the highest amount since 2003 but not nearly as much as expected, considering how low interest rates have fallen.

The reason behind the lack of refinancing seems to be the “perfect storm” of borrowers being denied refinances, and borrowers flat-out deciding against refinancing. Given the fact that this “perfect storm” is counteracting HARP’s success, was it worth keeping it around for another year?

If low rates are no longer the catalyst behind refis, and outside forces such as strict lending conditions and higher fees are preventing new refis, does HARP even have a purpose?

The original portion of this post was published on 03/02/10.

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168 Responses to “Update1: HARP Receives One Year Extension — What’s the Point?”

  1. Caroline Bleakley Says: October 4th, 2011 at 9:32 am

    I was recently thrilled to find out I was a perfect candidate for a HARP. However, after getting well into the process, I was told I do not qualify because my loan was not originated with Chase. My Fannie Mae loan orginated with another lender in May 2008 and Chase bought it in 2010. It seems like I am being punished because Chase bought my loan. It looks like banks are adding extra criteria so they don’t have to do these re-fiances. If Chase would not have bought my loan, I would be able to do HARP with my orginal lender — now I am out of luck.

  2. Delores Says: October 16th, 2011 at 10:43 pm

    I am about 143% LTV and Bank of American has sold or transferred our Fannie mae or Freddie mac mortgage to Greentree as the servicers. Can we refinance under Harp or whatever the program is in order to save a few bucks? We may have money for the appraisal, but certainly nothing to pay down the mortgage.

  3. Kevin in Crestwood Says: October 18th, 2011 at 9:20 am

    I am with BOA for a mortgage which of course was bailed out…I go to the local branches and I see Mercedes, Lincoln SUV’s, BMW convertilble’s and you go in and you see Starbucks coffee on their desks…. Hey wheres our bailout… I want to refi at a lower rate and told theres nothing they can do…. Oh Yeah I can remove all my money as I wish everyone would…

  4. Kevin in Crestwood Says: October 18th, 2011 at 9:28 am

    Chase does not want to do a HARP refi unless you were originally with them… BOA doesn’t want to refi because of being upside down on the loan… I am being punished for paying my morgage as I agreed to…. We need to remove our moneis from the “big guys” hit them where it counts! the pocket book

  5. Jim Says: November 8th, 2011 at 8:04 am

    I was denied a HARP refinance because I have a second home. The house I was refinancing is my primary home, however, Bank of America said it was not clear that was the case. Hence, denied. Service was absolutely terrible. Is there anyway to complain or file a lawsuit?

  6. CA’s Democrats in Congress Wake Up to Need to Address Foreclosures | Challenge Your Lender Says: November 8th, 2011 at 3:52 pm

    […] there were two components: HAMP and HARP.  HAMP is the Home Affordable Modification Program and HARP is the Home Affordable Refinancing Program.  Neither has come anywhere close to reaching its intended objectives, nor has either made any […]

  7. Erin Says: December 5th, 2011 at 11:19 am

    To all those who are having a hard time using HARP to refinance, especially with Bank of American, I am a Broker and we do these all the time. There are even more exciting updates and changes comming to the program. 🙂 Feel free to email me if you need some information or assistance. ebarrows@americannationwide.com

  8. Caroline Says: December 16th, 2011 at 12:29 pm

    I’ve owned my home since Dec 2005, and have 2 mortgages. I’ve paid all payments over the past 71 months in-full and on-time. My loan is backed by Freddie Mac, my credit score is at least 740, and I have a total LTV of 130%. Wells Fargo services my first mortgage, and told me that I am ineligible for HARP because my loan originated with a different lender. It’s not my fault that my loan was traded! What recourse do I have?

  9. debbie Says: December 18th, 2011 at 8:49 am

    I have 1st and 2nd with citimortgage. a 3rd with wells fargo. the 2nd and third are line of credits. We contacted citi about the harp program. They charged us 450.00 to do an appraisal for a conventional fixed rate. I know my 1st is fannie mae, I’m assuming the lines of credit are. Our ltv per appraisal they ordered for all three loans is under 85pct. However citi is saying they can only refinance the 1st, that it would need to be 80 ltv to get all done. Why were we charged so much for an appraisal and why can’t I refinance all? Our credit is in the mid 700’s. We are afraid to accept this, as we feel it should be all be combined under harp. Where is the help?

  10. Jennifer Carlson Says: December 26th, 2011 at 5:38 pm

    My husband and I were not in distress, in default, late, or behind on our mortgage with Chase. We have a conventional loan and are ridiculously upside down; but, we’re planning to ride it out. So, we were happily surprised to be solicited by Chase (via a delivery from UPS) with a “one time offer to lower your interest and monthly payments”. It offered to drop our interest from 7.25% to 4.75% (a savings of $400/mo) and make it a fixed rate, rather than the adjustable we had. All we had to do was sign and return the 2-pages, signature only, within 10 days. No income verification. No appraisal. They used the word “modify/modified” throughout the offer, but since we weren’t in distress, we read that word to mean “change”. We did our due diligence to see if our credit would be negatively impacted: we researched several websites (HUD, fannimae, and even Chase) and we called Chase directly and were told that it would not hurt us to accept the offer. It was offered in such a way that it appeared to be a positive offer since we were “good customers”. Nowhere on it did it say that our credit would be impacted. Fast forward to the present. My husband & I are in escrow on a new home, with plans to rent our current home (since the payments have been lowered). But, we’ve discovered that we can’t get financing beacuse Chase reported it as follows: “loan modified; not through a government program”. We took the credit report into Chase and asked why a bank would actively solicit people who were not in distress with a good payment history with a “one time offer”, and then slam them with a comment that is considered to be derrogatory. They effectively took us out of the market for two years – the home loan specialist at Chase said that even he wouldn’t be able to give us financing with that comment. We are furious! We’ve demanded to have the comment removed, but thus far, we haven’t heard back at all. Any suggestions or comments would be greatly appreciated… We have 3 weeks to get this resolved or we risk falling out of escrow on the new place.

  11. Rick Says: January 18th, 2012 at 5:58 pm

    I have a Fannie Mae owned loan originated by EMC. Now it is serviced by Chase. Chase says it does not qualify for HARP because they did not originate it. How do I get around this road block?

  12. ikester Says: February 22nd, 2012 at 10:39 am

    @ Jennifer Carlson- your post scared the daylights out of me. But it did make me get more educated about these modifications. You, apprently, refi-ed through HAMP, not HARP. If, if fact, you did refi through HAMP ( which doesn’t make sense being that your principal amount was not reduced), then your credit can be adversely affected. But since it appears that all you got was a rate reduction, that is HARP, so fight like the dicken’s to clean up your credit report. Good luck

  13. Zippy Says: February 28th, 2012 at 4:11 pm

    Tim. A couple of questions.

    1) Tim, I believe you linked to the HARP website and stated that any loan servicer who had a loan owned or guaranteed by Fanny or Freddy HAD to offer HARP for this loan. Is this true? My loan servicer, Provident Funding, representative stated over the phone today that they did not participate in HARP and only offered 95% of home value in their loans despite the fact that our loan is owned by Freddy. (our loan to value is ~111%)

    2) Federal law mandates that PMI be removed by the servicer when 78% of the ORIGINAL value of the loan is paid. This will happen for us in early 2015 after paying PMI ($150/month) for 12 years. We are paying 5.8% interest and under TARP might be able to refi somewhere around the 5% mark. If by some miracle we are able to refi under TARP, would PMI be re-instated on the new amount of the loan (we would have to pay it for another 12+ years) or would we still be able to automatically ditch PMI in 3 years? Or if we kept the current loan, we would lose PMI automatically in 3 years. Considering refi fees and the extended payment period for the new PMI (doubt if home value will increase to 20% over loan amount anytime soon), one has to wonder if it would pay off to refi in this case?

  14. Tim Manni Says: March 5th, 2012 at 1:41 pm

    Hey Zippy,

    1)HARP is still voluntary. Although it doesn’t seem like it’s in their best interest, Provident has the choice. Then again, so do you. Shop around to a different lender and see if they’ll refi your loan. The Making Home Addordable site says, “Call your mortgage lender, or any lender approved to do business with Fannie Mae or Freddie Mac, and ask for a Home Affordable Refinance application.”

    http://www.makinghomeaffordable.gov/about-mha/faqs/Pages/default.aspx

    2). You’re not refinancing under TARP, but rather HAMP (see link above). PMI is a sticky issue with refinances. Be sure to read this blog post: http://blog.hsh.com/index.php/2012/01/does-mortgage-insurance-hurt-my-chances-of-a-harp-refinance/

    Thanks for commenting,
    Tim

  15. Cathy Says: April 30th, 2012 at 6:11 pm

    I have a Freddie Mac mortgage, lost 70,000.00 in equity on my mobile home and not through its depreciation. I Owe what it is worth now- 175,000.00 The home is newer,foundation/ full basement and on 5 acres of cleared land with a very nice horse barn. No one will refinance it under HARP or in any way shape or form!!(not even my lender, Ocwen) I am at 6.75% interest, and no PMI.. and it is a huge struggle to make ends meet. Help!!!!!

  16. Bob "Sarge" Forry Says: October 24th, 2012 at 7:33 pm

    For 6 long years we battled the same issues, robbed Peter to Pay Paul so we wouldnt miss or be late on a payment and it hurt us!!! We tried several different companies all of which told us initially that it wouldnt be a problem or “it looks good” only to get another 3 or 4 hundred bucks into the hole for an inspection or appraisal. Best part is that call you get at the 11th hour telling you you need to reduce your debt, come up with another $3000, or, better yet. . . they just say sorry we cant help you.

    Thank God I found this guy, right in my area and he told me that not only were the things the mortgage company doing wrong they were borderline illegal. I cant guarantee you he can help, I can only tell you that he helped us after everyone else failed. I would call him and ask if he can help or knows of anyone in your area that like him, wants to help honest hardworking homeowners and small business owners.
    Sarge

    Tidewater Mortgage Services, Inc.
    3920 Market Street
    Camp Hill, Pa 17011
    cell- 717-571-0772
    office-717-731-9703
    fax- 717-620-3302

  17. shelly Says: January 27th, 2013 at 7:40 pm

    This is my situation, LTV 95% one primary mortage with b of a I do have LPMI my original loan was with country wide. Tried to re-finance with a company which determined that I don’t have sufficient income and since they use automated loan submission I don’t qualify until my income will change. They did tell me that my loan services (B OF A) might be able to do manual submission where income won’t be such an issue through the HARP program. Went to my bank loan officer looked at my loan tells me its not fannie mae, I called fannie mae they said they show records my loan is. Called the officer back asking why can’t I qualify he tells me that’s what the computer spitted out I said give me a reason he said I think its the PMI, I said so why are you telling me i’m not fannie mae he said well tell them they have to reported correctley called fannie mae who said tell the bank to call “deskktop underwriter” to correct info, loan officer at B OF A said he will call and look into that. He also said that he have seen loan that where not eligable a year ago to go through as they are constantley updating “something” in the computer.

    question for tim: so do you think they have some sort of flagging system where they don’t let loans with LANDER PMI go through refinance? is this legal? as according to the HARP web site there is no mention of any PMI/OR LPMI that makkes you diqualify?

  18. shelly Says: January 27th, 2013 at 7:48 pm

    Just wanted to add: the loan officer at B OF A determined that I don’t qualify just by inputting my loan number in the computer not even getting any reocrds from me such as credit report, income, appraiser..it’s like my loan number was flagged as non-conforming( I think this is the term that he used…).

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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