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HARP Improvements For Underwater Loans
Government Announces
Changes To HARP That
Will Help Underwater
Borrowers
November 17, 2011

The Home Affordable Refinance Program (HARP) was
started in March 2009 by the Obama Administration. The
primary objective of the program was to allow over 5 million
homeowners to refinance their mortgages, and make lower
payments.

The program has fallen short of its goals,. As of August 31,
2011, only 894,000 transactions were completed. This lead
the federal government to make some changes to HARP
that will help more homeowners. The new and improved
HARP is being referred to as HARP 2.0.

The failure of the "old HARP" centered around the loan to
value (LTV) ratio. The program helped homeowners with
LTVs between 80% and 125%. However, the current
housing crisis has stripped away more than 50% of home
equity for most homeowners. In these situations the
homeowners became ineligible for HARP.

HARP 2.0 addresses this problem. There is no limit on the
LTV. This change alone should make more than a million
borrowers eligible for the program.

Another major problem with HARP was that lenders refused
to write down loans. Lenders feared that they will be forced
to buy back bad loans. These loans could be bad for a
variety of reasons including, to illegal documentation, fraud
and questionable underwriting.

Here are some additional highlights of HARP 2.0.

>> Most homeowners will not have to get a new appraisal
or have their loans underwritten. This saves time and
makes the process smoother.

>> The end date to get a HARP 2.0 refinance has been
extended to December 31, 2013.

>> Certain fees will be modified or eliminated, such as loan
level price adjustments, a.k.a. "risk based fees"..

>> The homeowner must be current with his mortgage with
no late payments in the last 6 months, and only one late
payment in the last 12 months.

>> The loan must be owned by Fannie Mae or Freddie Mac.

>> The loan could have been sold to Fannie Mae or
Freddie Mac on or before  April 1, 2009.