The blogosphere is chock-full of articles announcing the most recent and substantial changes to the federal government’s HARP 2.0 refinance program. The most significant and widely touted change to the program is its elimination of loan to value ratios that previously had limited many homeowner’s access to the program. As now designed HARP 2.0 purports to allow for unlimited loan-to-value (LTV) on most program refinances. Great news, right? Well, not so fast.
As author and mortgage expert Dan Green writes this week, “[A]s many underwater homeowners are finding out the hard way, just because HARP allows it, that doesn’t mean banks will do [it].” Statistical data compiled by Green establishes that many major lenders are restricting HARP 2.0 refis to owners with loan to value ratios in the 105% to 125% range. Unfortunately, this leaves an enormous portion of the underwater sector out in the cold.
Over the last several years I have consulted with hundreds and hundreds of distressed property owners in Northern California, and particularly in Alameda and Contra Costa counties. Many distressed homeowners in these regions have LTV ratios of 200% and more. Green’s statistics show that less than 5% of HARP 2.0 mortgage refinance applicants fall within this range. Which means that, even for those folks who otherwise meet the program’s eligibility criteria, they’re not being helped.
Moving forward, it will be critical to determine which lenders are in fact honoring the unlimited LTV criteria. I will do my best to keep you apprised of the identity of these lenders. In this regard, it is critical to recall that HARP 2.0 does not require homeowners to refinance through their existing lender. Any bank representative that advises you to the contrary simply is incorrect.
Please let me know if you think you or your client may benefit from HARP 2.0, and I’ll do my best to help you select a qualified mortgage professional in your area to help with the application process. Meanwhile, for a complete description of the current program guidelines, including a clear and comprehensive set of FAQ’s, I refer you to Dan Green’s excellent website: http://themortgagereports.com/259/harp-making-home-affordable-guidelines.