HARP 3 Financing for Non Fannie Mae or Freddie Mac, Can it Happen?

I hope so! Even with the huge amount of borrowers that have refinanced their underwater homes into the HARP 1 and 2, there are still others that would have qualified if Fannie Mae or Freddie Mac owned their loan . It is hard to explain to a potential borrower that even though they have great credit, employment and payment history they don’t qualify because Fannie or Freddie do not own the loan. The borrower did not make the choice of where the loan was sold and feels left out.

HARP 1: With the limit of 125% LTV, very few would qualify especially in the metro areas hardest hit such as Miami, Orlando, Tampa and most of South Florida. They also did not allow investors to refinance which would make it impossible for anyone with an investment property take advantage of the new low rates.  At that time HARP 1 was a very new product in which the lenders also added their “overlays” or restrictions to the loans. Some of these restrictions included no condos, no more than 4 properties on credit and no investment properties. This was more of a test to see if it makes sense for the lender to take on the added risk. The banks wanted to test the waters and see what problems arise and find solutions to the work-flow and measure the risk.

Apply for a HARP 2.0 using our Mini Application

HARP2: Because of the small numbers of borrowers that were helped with HARP 1, the government decided to relax the guidelines. The new program not only removed the maximum LTV but also allowed investors to refinance. This greatly expanded those who can be helped since the investor communities who have Florida condos and duplex in their portfolio can now take advantage of the HARP 2 program. Lenders can still put restriction on the loans and most still don’t allow investment condos. It has been a long journey but I have been working with lenders that not only allow investment condos but the rates are very competitive making it a great deal for the borrower. With this new program I have been able to not only lower the payment for most, but also chop several years off the loan. The banks like shorter mortgage terms as it amortizes the loan faster and gets them in the black sooner therefore lowering the risk. A WIN WIN for everyone. It is a WIN for the borrower with lower payments, less years, and saving their credit, A WIN for the lender with quicker amortization and lower risk.

HARP 3: Currently it is only talk amongst those in congress about possibly extending HARP 2 to include borrowers with loans not owned by Freddie Mac or Fannie Mae.  I agree with the expansion into HARP 3 because those that qualify for the program have every intention on continuing making payments and saving their credit. The one thing that stands out from the borrowers that I have refinanced into HARP 2 is most have great credit, stable employment and value their credit. Most important is their credit and the intention to repay. That is what banks are looking for.

HARP 3 will be a viable option if the politicians decide to make it a reality. We all know that we don’t need any more foreclosures and those felt left out may start defaulting on their investment properties if they feel left out.

Apply for a HARP 2.0 using our Mini Application

 

About

Alexander Morales is a Florida licensed mortgage and real estate broker with over 14 years of experience. An expert in Private Money and HARP, he is located in Miami, Florida. Connect with Alex on Google+

About AlexMorales

Alexander Morales is a Florida licensed mortgage and real estate broker with over 14 years of experience. An expert in Private Money and HARP, he is located in Miami, Florida. Connect with Alex on Google+
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