Reply
New Visitor
murray80
Posts: 2
Registered: ‎06-24-2009
0

Restrictions on HARP refinance?

I was well on my way to refinancing my mortgage from a 30 year fixed of 6.25% to a 5 year ARM locked in at 3.75%.......

 

Until Wells Fargo told me that Fannie Mae will not allow refinancing under the HARP program from a fixed to an ARM.  I have found no mention of this restriction on the Fannie Mae website and called 2 levels of Fannie Mae service reps who also told me they have no record of this restriction.

 

Does anyone here have any insight into this?

 

I appreciate any responses.

Senior Contributor
mickie08
Posts: 3,299
Registered: ‎04-22-2008
0

Re: Restrictions on HARP refinance?

the question is why you would want to.  Given the current financial market, inflations is pretty much a given and rates approaching 10% are quite possibly down the road.  What happens 3 years from now if that is the case?  6.25 % fixed is an extremely low HITORICAL interest rate.  3.75 ( i am assuming their are point being paid to get this rate as well) although low, is just going to make you go refi in a couple years when rates are likley to be much higher than they are now.

 

As far as Fannie and Freddie, I have heard that due to the mortgage crisis and the inability of so many people to get out of arm loans that ended up defaulting, that people are not to welcome to switchin from a fixed laon to an ARM.  Whether that is investors who buy the loan, Fannie, Freedie, FHA, I don't know .  I don't really know the specifics.

Moderator Emeritus
Lel
Posts: 5,267
Registered: ‎03-18-2008
0

Re: Restrictions on HARP refinance?


murray80 wrote:

I was well on my way to refinancing my mortgage from a 30 year fixed of 6.25% to a 5 year ARM locked in at 3.75%.......

 

Until Wells Fargo told me that Fannie Mae will not allow refinancing under the HARP program from a fixed to an ARM.  I have found no mention of this restriction on the Fannie Mae website and called 2 levels of Fannie Mae service reps who also told me they have no record of this restriction.

 

Does anyone here have any insight into this?

 

I appreciate any responses.


I'm assuming that you have to go with the government's Home Affordable Refinance program because of insufficient equity in your home, correct?  Because if you do have sufficient equity, you could refinance outside HARP and choose any loan product that you wish.

 

Like mickie already said, one of the major aims of this program is to get people OUT of ARMs, not into them.  Many homeowners chose ARMs for a variety of reasons - low initial rates, a desire to pay interest only, etc.  However, with the decline in home values, these borrowers find themselves unable to refinance and unable to afford the terms of the loan once the rate resets.

 

A disproportionate number of borrowers at risk have ARMs, though recently the proportion of fixed-rate loans at risk has increased (due to loss of income of the fixed-rate borrowers).

 

If you must refinance your loan through HARP, it is highly unlikely that a lender will agree to put you into an ARM from your fixed rate loan, since the odds of default from an ARM are higher, especially since rates will almost definitely be higher when rates reset in 5 years.

 

Having said all that, you can still snag a lower 30-year fixed through HARP.  Keep in mind that this program is targeted to borrowers who are actually facing some sort of hardship.  Just because you want a lower rate isn't grounds for a refinance through HARP.  I'm not going to get into the "fairness" of this distinction, but that's the intent of the program. 

New Visitor
murray80
Posts: 2
Registered: ‎06-24-2009
0

Re: Restrictions on HARP refinance?

Thanks for all the fatherly advice on my situation, but trust me, I know that having a 3.75% rate for 5 years will save me a boatload of money.

 

I do not plan on being in this house in 5 years, so the ARM resetting doesn't matter.  I make $90K/year in NC so I'm not too worried about not making payments.

 

Back to my original question..........

 

Does HARP allow someone to go from a fixed to an ARM?

 

Thanks all

Senior Contributor
mickie08
Posts: 3,299
Registered: ‎04-22-2008
0

Re: Restrictions on HARP refinance?

to the best of my knowledge, no it does not.  The point of the program is not to lower the payemtns of someone who got a reasonable loan.  The point is too help out people who got sucked into subprime, ARM's, and interest only loans and who now can neither finance due to value drops, or afford the newer adjusted payments.  To get a ARM, you would have to go through a full refi via FHA or conventional, not the HARM program.  Again, this is to the best of my knowledge.
Moderator Emeritus
Lel
Posts: 5,267
Registered: ‎03-18-2008
0

Re: Restrictions on HARP refinance?


murray80 wrote:

Thanks for all the fatherly advice on my situation, but trust me, I know that having a 3.75% rate for 5 years will save me a boatload of money.

 

I do not plan on being in this house in 5 years, so the ARM resetting doesn't matter.  I make $90K/year in NC so I'm not too worried about not making payments.

 

Back to my original question..........

 

Does HARP allow someone to go from a fixed to an ARM?

 

Thanks all


From what I can see, there is nothing that specifically prohibits refinancing into an ARM.  However, the examples of when HARP would apply describe refinancing from an ARM into a fixed-rate product, not the other way around.  There is some flexibility for the lenders and investors to establish criteria for refinance or modification, and it's very possible that one restriction is that they won't refinance into ARMs under HARP.

 

One goal of the Making Home Affordable plan is to guarantee long-term stability and affordability of mortgages.  To take your fixed rate loan and refinance it into a 5 year ARM goes against this goal.

 

Trying approaching another lender to see if they will refinance your loan into an ARM.  Under HARP, you are free to approach any participating lender to refinance. 

 

I used to have an ARM.  When we bought our house, we said that we'd probably only stay for about 5 years, and then move.  My home value has dropped significantly.  We're no longer planning in moving in a year. 

New Visitor
hutad
Posts: 1
Registered: ‎08-28-2012
0

Re: Restrictions on HARP refinance?

[ Edited ]

I realize this is quite an old thread however has anyone considered HARP 2.0?

 

Certain requirements must be met to qualify for HARP loans. While there may be additional criteria imposed by the mortgage servicer, the government requirements are as follows:


1.  The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae - Many homeowners are unaware that their mortgages are linked to one of these organizations, since neither Freddie Mac nor Fannie Mae deals directly with the public.
2.  The mortgage must have been acquired by Freddie Mac or Fannie Mae on or before May 31, 2009.
3.  The homeowner must not have a previous HARP refinance of the mortgage, unless it is a Fannie Mae loan that was refinanced under HARP during March-May 2009.
4.  The homeowner must be current on their mortgage payments, with no (30-day) late payments in the last six months and no more than one late payment in the last twelve months.
5.  The current loan-to-value ratio (LTV) of the property must be greater than 80%.
6.  The homeowner must benefit from the loan by either lower monthly payments or movement to a more stable product (such as going from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage).

 

The major difference between the first version and the second version of HARP is that the LTV ceiling of 125% has been lifted to now be an unlimited LTV.  You can be underwater 200% and still be eligible and qualify for HARP 2.0.

 

Freddie and Fannie are taking tons of HARP 2.0 refinance applications now and this program seems to be helping tons of borrowers nationwide who didn't qualify for HARP 1.

 

Hope this helps


myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}