The most up-to-date HARP 2 mortgage requirements and guidelines. HARP, which stands for Home Affordable Refinance Program, was enacted in mid 2009. There were many restrictions with the original HARP program or also called HARP 1.0, which automatically disqualified many homeowners. In the beginning of 2012, HARP 2.0 was rolled out and has taken many of the previous restrictions off the table, making millions more homeowners eligible to refinance.
Some of the basic eligibility requirements of the HARP 2.0 program:
– Loan must be owned by Fannie Mae or Freddie Mac
– Loan was endorsed by Fannie Mae or Freddie Mac on or before May 31st, 2009.
– Loan could not have been refinanced using the HARP program before, unless it was between March – May of 2009.
– There are no Loan to Value (LTV) restrictions like in HARP 1.0
– Must have had most recent six months of on time payments, no more than one late payment in the past twelve months.
– While this is not a conclusive list of eligibility requirements, these are the most common that every bank has to abide by set forth by the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac.
Now that the eligibility requirements have been gone over, these next points are the underwriting guidelines the most banks and lenders have been following.
– Income Requirements – Must have a Debt-to-Income (DTI) ratio of 45% or less
– Credit Score – Minimum credit score of 620
– Foreclosure and Bankruptcy – Typically 4 years have had to pass
– Occupancy – Can now be a Primary Residence, Second Home or Investment Property
– Mortgage Insurance – Can now include loans that have mortgage insurance on it, although some mortgage insurance companies still will not allow it.
This a list of the most common underwriting guidelines that banks are qualifying borrowers with. The FHFA has never come out with restrictions to DTI, Credit Score or Foreclosure and Bankruptcy, so if a lender cannot refinance because of one of these, look into other lenders or banks because not all follow the same set of rules.
There could be much better news on the horizon in the form of HARP 3.0, which would allow even more borrowers to become eligible to refinance. That all depends on how the Obama Administration wants to handle the situation. With the Fiscal Cliff crisis now averted they may be able to start putting some serious thought into the HARP 3.0 program.
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