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Received HARP Principal Reduction due to being underwater; now want to refinance

I was underwater with my mortgage. I received a funding from HARP such that I was even with current market rate, according to the appraiser. (Since I had 4 foreclosures/resale for even less within a block of me, I argued the appraisal was high but they were basing it on 2 totally redone houses a couple of blocks over). HARP wanted me to refinance within 180 dye, which, of course, I could not do at the LTV ratio was way too high. I am now 1 1/2 years out from that point. I have now paid down the mortgage such that I should be able to refinance (not asking for anything out, have no plans to sell, or anything odd - just want a lower interest rate and lower payments BEFORE the rates shoot back up). Because the HARP lender put the monies in a promissory note/ subrogated / etc., the mortgage company is saying my LTV is too high as they are adding the two amounts together and saying I have to pay off the HARP amount along with the first mortgage.I keep pointing to the clauses that say I don't and they cannot seem to understand that once I refi, I apply to HARP and they will forgive their 'loaned' amount. (I have a tiny, cheap house here; not some over priced monster. I have great credit, etc). Any suggestions for how to speak the right lingo to the mortgage broker? by gay_helen89 from Panama City, Florida. Dec 16th 2015 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

I think what you mean is you did a HAMP (Home Affordable Modification Program) loan.. HARP (Home Affordable Refinance Program) is a refinance program for folks who were underwater, but still wanted to refinance to take advantage of the lower rates.. HARP allowed them to refinance the outstanding balance without the necessity of an appraisal, nor did the program take into consideration the loan to value.. But what you did was a HAMP loan modification. This is completely different.. Under HAMP, you had a principal reduction or principal forgiveness, and lenders will not refinance you if you had a loan mod where there was a principal reduction/forgivness.. So, even though the HARP guidelines allow for you to refinance a modified mortgage, lender "Overlay's" disallow your scenario because there was a principal reduction. Sadly, the only way around this is to sell your home, and buy another.. I've yet to come across a lender who will allow you to refinance after a loan mod with principal reduction. 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. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Dec 16th 2015
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

Ok.. I think I understand, but without seeing all your documentation, it's near impossible to advise correctly, but in general, I think you actually did do a HARP refi, But you combined it with the "Hardest Hit Funds" which is a Grant that allows you to reduce the first mortgage to where your LTV was not greater than 100%. But the grant has repayment terms if you sell inside of 5 years. Under that scenario, you should be able to obtain financing, but you cannot use HARP, since with that program, you can only use it one time.. If you refinance, you would be subject to the lenders Loan to Value and Combined Loan to Value (LTV & CLTV) guidelines. And, if you apply for a conventional refinance, you must meet the LTV & CLTV guidelines.. But if your loan to value is greater than 80%, you will pay a higher rate and you would be required to pay mortgage insurance. For a conventional rate and term refinance, you cannot be above 97% LTV/CLTV. This isn't anyone trying to "screw you over".. this is the guidelines that have been in place for years, and it's why the government allowed for HARP refinancing in the first place.. So unless your combined LTV is 97% or lower, then you cannot do a conventional refinance. 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. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Dec 16th 2015
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