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HARP Refi...problem with AUS and need some help

Was working with a Broker to refi my Fannie backed 1st... and roll in my second mortgage with it. Going from a 30 yr to 15 yr combined for both. My first was verified as Fannie owned and the Broker said the lender had no issue with rolling in the second. Income, debt and credit score were no issue. The problem that the lender ran into was AUS is coming back saying the loan is ineligible. The Broker has basically given up. When I called Fannie they told me that lenders know to call them when this situation comes up.I liked my Broker and was getting a very good deal. I don't want to start working with another broker/lender to have the same thing happen.Any suggestions or ideas would be appreciated.Thanks!Bob by bd3lcs1 from Melbourne, Florida. Apr 30th 2013 Reply


Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

Change lenders

Apr 30th 2013
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Elden Lewis (elewis_409_299)
#40 ranked lender in Indiana - 223 contributions

As you can see from most of the responses you cant roll in the second with HARP. Just for kicks tell your broker that you want to subordinate the second and if he gets an approved/eligible you will know that's the problem. Otherwise he must have some info entered incorrectly

May 1st 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,646 contributions

You are NOT able to roll in a second mortgage on HARP refinances. Your Loan Officer appears to have been the issue. In MN or WI, visit www.HARP-Refinance-MN.com

May 1st 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

Even if the second was a purchase money loan, meaning it was used to acquire the property along with the first, HARP will not allow both loans to be consilidated. The only way for you to qualify for HARP would be to pay off the first and subordinate the second.

May 1st 2013
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Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

HARP conditions are very rigid.

May 1st 2013
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Barb Lanis (BarbLanis)
#71 ranked lender in Illinois - 662 contributions

Bob: That's very unfortunate that your broker wasn't aware that in no circumstances can a 2nd mortgage be refinanced on a HARP loan. The refinance can only include the 1st mortgage. So, as long as you're okay with just refinancing the 1st mortgage, then move on to another lender. You should achieve significant savings with current market rates. If you would like further info from me, please feel free to contact me. Our group is very familiar with HARP refinances and yes, licensed in FL.

May 1st 2013
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,252 contributions

Your broker, as comfortable as you are with him, isn't up to date on the guidelines... you absolutely cannot roll in a 2nd mortgage into a HARP refi. Even if the lender is willing to do a manual underwrite, it still wouldn't be allowed.. Purchased money or not.. This is right out of the FNMA Q&A form: "Q37. Can borrowers with a first-lien loan and a home equity line of credit or a closed-end second mortgage combine the first and second mortgages into the new refinance if the maximum LTV is not exceeded? No. Subordinate financing in the form of a home equity line of credit or a closed-end second mortgage may not be satisfied with the proceeds of the refinance mortgage. This restriction includes any purchase-money second liens that typically would be permitted under our standard limited cash-out refinance guidelines." Now if you loan to value including the 2nd is below 85%, then you can do a non-HARP refi, with some sort of mortgage insurance, and just about any lender can do this loan.. so my guess is that if AUS is giving an Ineligible, then there's ur problem!!!... I bet if he re runs it with the 2nd being subordinated, then it would accept it.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

May 1st 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

Then there has to be some other underlying issue that has nothing to do with HARP that is causing those inelligible findings.

May 1st 2013
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

Bob, I'm not sure how they were rolling the 2nd. into it. HARP 2.0 doesn't allow that. So that may be the reason you aren't getting the approve/eligible. I actually specialize in HARP 2.0 and have closed 1000's of them. Give me a call or e-mail with any questions and I'm happy to help. P: 888-320-7888 - ken@mortgagesforamerica.org - www.mortgagesforamerica.org - Ken Burrows

Apr 30th 2013
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Ken - Thanks...I was told that because they were taken out at the same time it was allowed, and the lender OK'd it. In fact the Broker told me he had done it before.

Apr 30th 2013
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

I have seen it a couple of times but it's an internal Bank like HARP program and is very rare. The actual Fannie and Freddie HARP 2.0 doesn't allow the 2nd. to be rolled into the loan. The 2nd. is subordinated at closing.

Apr 30th 2013
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Ken thanks again...one more question. Who decides if they will allow the consolidation...Fannie Mae or the Lender?I think I know the answer...since it was AUS that said I was ineligible.

Apr 30th 2013
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

Only the lender. Fannie Mae doesn't allow consolidation at all on the HARP 2.0 program. If the lender was allowing an internal consolidation then it's possible but from what you are telling me they still ran it through Fannie Mae DU. So from what it sounds like is that loan officer doesn't understand the HARP 2.0 program. In the HARP 2.0 world it's best to work with a knowledgeable broker that understand what all of the lenders are doing out there. Each loan is completely different and every lender has their own internal overlays. Most of the big banks don't really offer strong HARP loans. We can do unlimited LTV, higher DTI, Mortgage Insurance transfers, Fannie and Freddie unlimited, etc...

Apr 30th 2013
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James Mazzola (Mazzola)
#110 ranked lender in New Jersey - 313 contributions

Thank you for your mortgage request. Sun National Bank is a Federally Chartered Bank who can lend nationwide. To better help you, I would like to see your financial situation.Please send me the following information for all borrowers:1. 1 Month of current pay stub's2. 2 Year W-2 Income Statements3. 3 Months of current Bank StatementsPlease forward them to:James Mazzola8 Matthew AvenueKendall Park, NJ 08824jmazzola@sunnm.com or cornoil@comcast.netIf you have any questions, please do not hesitate to contact me:(O) 973-805-4107(C) 732-501-4249(F) 732-951-0629Thank you,James Mazzola

May 1st 2013
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Bartolomeo Castelli (BartCastelli)
#32 ranked lender in Missouri - 1,056 contributions

Bob - unfortunately I do believe the broker you are dealing with may be fantastic, but got a bit ahead of him/herself in regards that you can not roll into a new first HARP loan the second mortgage. If we could, life would be good for a lot of us in the industry, but there are limitations and this is one of them.

May 1st 2013
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Kiernan Brown (KiernanBrown)
#51 ranked lender in Michigan - 149 contributions

Your best bet to combine your initial purchase second with your initial purchase first is to go to the lender that currently holds both mortgages. Other wise you will only be refinancing the first through the HARP2 guidelines with another lender.

May 1st 2013
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Wow...thank you all for the help and info. I asked my broker about this and he indicated that he submitted the loan without consolidating the second and AUS still said the loan was not eligible.

May 1st 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,646 contributions

There are many reasons why a HARP loan may not be eligible... We run across it every more and again. Maybe you are one of the unlucky ones?

May 1st 2013
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,252 contributions

If it still came back as ineligible, then they always give you a reason... Sometimes it's because the loan was submitted inaccurately, sometimes the loan could have "Pool Insurance" making it ineligible, and sometimes it's not the loan, but the borrower.. bad credit, low score, low or unusable income, etc.. however these questions your asking are best suited for your loan officer.. he should be the one your asking these questions to.. if it turns out he's incompetent, then you need to contact someone else.. The best advice I can give you is to contact a LOCAL mortgage broker and apply with them. Do not use the local "Big" bank, or one of those 50 states internet lenders or nationwide lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

May 1st 2013
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Michael Patterson (MichaelPatterson)
#53 ranked lender in Washington - 71 contributions

Bob, you definitely got a lot of great answers about not being able to roll in the 2nd which is true. That should have been identified in the first few minutes of your conversation initially. Doing rate and term refi on the first with HARP and either paying off the 2nd or having it go back in 2nd lien position is the only way to work it. If your broker is still getting an ineligible finding, then there might be some incorrect data going into the system. The DU Findings should be able to indicate the factor(s) causing it to be ineligible. I'd recommend asking if you can get a copy to fully understand why, and having another lender review that for you. If credit is good and debt ratios are good, then just having a high combined loan to value shouldn't automatically kill the approval on the 1st. (Not to say that subordinating the 2nd won't be a challenge in and of itself even if you get the approval on the 1st. Most 2nd lienholders would rather keep their heads in the sand than know where their real loan to value positions are. Many have limits on LTV that could disqualify the subordination.)

May 2nd 2013
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