HARP 3.0
H.R. 736 – To provide for the expansion of affordable refinancing of mortgages held by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.Introduced on the 14th of February by Representative Peter Welch
HARP 3.0 would open refinancing options for millions.
Legislation in the U.S. Senate would create a second wave of updates to the Home Affordable Refinance Program (HARP 3). The program is designed to help struggling homeowners obtain more affordable and stable mortgages through refinancing. The first updates to the 2009 program were dubbed HARP 2.0. With the pending bill, observers were quick to call the legislation HARP 3 .
What is HARP 3.0?
Introduced by U.S. Senators Robert Menendez and Barbara Boxer, Senate Bill 3085 says it all in the title: Responsible Homeowners Refinancing Act of 2012. Defining the purpose the act reads, “To provide for the expansion of affordable refinancing of mortgages held by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.”
Housing and Urban Development (HUD) Secretary Shaun Donovan recently hosted a Google+ Hangout with underwater homeowners. Moderated by Spencer Rascoff of real estate giant Zillow.com, the HUD Secretary answered questions about refinancing programs and pending legislation.
Referring to refinancing reform Donovan said, “We know that this is something that we can do more on, and we are seeing real results. We’ve had a doubling of refinancing applications since we put out many of our programs last year. The President made this a centerpiece of his We Can’t Wait Initiatives.”
Will HARP 3.0 combine SB 3047 & SB 3085 ?
Donovan outlined another bill, the Expanding Refinancing Opportunities Act, which would help non-government backed borrowers. But it is the much-anticipated HARP 3.0 changes, under Senate Bill 3085, that will be of the greatest help for HUD backed borrowers who are “paying their mortgages” and “doing the right thing.”
Part of the problem, according to Donavan, is that under HARP 2.0 some government-backed loans could not be refinanced due to loan-to-value ratio (LTV) requirements. Since HUD is already “on the hook,” easing LTV requirements makes sense. Part of a solution is an automated appraisal system using Fannie Mae and Freddie Mac data. For the 20% who now need a full appraisal, thus being barred from a refinance, HARP 3.0 would eliminate “the need entirely.” He reasons, an “appraisal doesn’t serve any real purpose.”
“There is a bipartisan interest in this legislation,” said Secretary Donovan. “But its not going to happen unless Americans in these situations reach out and let members of congress know ‘we need this help,’ it’s good for us. It’s good for our neighborhoods because its going to lower the number of foreclosures, and its good for the economy overall because it generates more money that re-circulates, creating jobs. We all benefit — there are no costs to the government.”
“Across the country there are encouraging signs in the housing market,” said moderator Rascoff. “Inventories are tight in some areas and values are rising, but that doesn’t mean homeowners are in the driver’s seat or out of the woods yet.” With 25 percent of homeowners underwater he points to government programs and HARP 3.0 that can help.
Upon introducing the bill, in early May, Senator Menendez said, “I agree with President Obama’s ‘to do’ list to create jobs and strengthen our middle class. That’s why Senator Boxer and I are introducing legislation today to clear the way for responsible homeowners to refinance.”
For Senator Boxer, it’s a “win for responsible homeowners” who will under HARP 3.0 be able to take advantage of record low rates. She adds, lenders and communities are winners, as well, with an “influx of new business.”
Analytics Chief Economist, at Moody’s, Mark Zandi projects that HARP 3.0 will allow 3 million more responsible homeowners to refinance. With a historically low rate of 3.84, those paying above 5 percent under Fannie Mae, or Freddie Mac, can save up to three thousand dollars a year with refinancing.
HARP 3.0 could expand access to refinances for homeowners.
HUD Secretary Shawn Donovan recently testified before the Senate Committee on Banking, Housing and Urban Affairs to address concerns about the effectiveness of HARP 2.0, as well as proposed legislation in line with President Obama’s plan to “Help Responsible Homeowners and Heal the Housing Market” HARP 3.0 .
Since the launch of the original Home Affordable Refinance Program (HARP), over 14 million homeowners in America have gotten refinancing on their mortgages. Donovan estimated that these refinances have been responsible for close to $27 billion in economic activity per year.
The next phase, known as HARP 2.0, was implemented to pinpoint the barriers that were preventing certain people from refinancing. In March of this year, financings were more than double what they were a year ago across the country — more than triple in the hardest hit states.
With FHA refinancing fees set to be reduced, the number of HARP applications should increase even more. And it doesn’t end there: another phase of HARP may be in the works, pending several pieces of legislation designed to make refinance and equity building available to all responsible borrowers.
HARP 3.0 Legislation in the Works.
One proposed bill is the Responsible Homeowner Refinancing Act of 2012, sponsored by Senators Barbara Boxer and Bob Menendez. The act gives HUD the authority to extend streamlined refinancing to all loans insured by government-sponsored enterprises. This means that borrowers with GSE loans would no longer be hindered by appraisal or loan-to-value requirements.
Another proposal would enable refinancing for borrowers with non-government-backed mortgages. These borrowers would be eligible if they are employed with good credit and are up to date on their mortgage; certain limits to the mortgage amount would also apply. While the FHA would run the program, the HARP 3.0 financing would come from outside the administration.
A third piece of legislation would require GSEs to cover the average closing costs for refinanced loans with new terms under 20 years, saving borrowers $3,000 on average.
Clearing obstacles to refinancing.
So, what hurdles do homeowners trying to refinance their loans still face? Some borrowers with 80% or lower loan-to-value ratios on their first liens can’t refinance because of second liens or additional debt. They must have the second mortgage written down or even extinguished before proceeding. Appraisal costs can also be a problem, as not all areas are covered by automated appraisals and instead require more expensive manual ones, discouraging refinances. Costs can also be affected by competition (or the lack of it) among servicers, and some servicers don’t have enough incentive to finance loans unless they are already servicing them.
One way to change this would be the facilitation of cross-servicer refinances. The goal would be to bring these to the same level as traditional same-servicer refinances by setting the same eligibility standards and representations and warranties for both groups. This would include loosening the underwriting requirements for cross-serviced loans to allow for greater competition and thus more favorable refinance options for borrowers.
Donovan said that there are measures planned to protect against risk in extending refinancing to non-GSE borrowers. Since these borrowers need to be current on their loans and meet credit and employment conditions for eligibility, the loans would already be considered low-risk. For high-risk underwater loans, refinancing would only be possible if they were written down to a loan-to-value ratio of 140% or less.
MI Cancellation
With a HARP refinance, the percent of coverage and premium rate of the mortgage insurance are unchanged, as only the existing coverage is being modified. The premium rate can be enacted on a new loan amount, and any change in the amount has an effect on the premium.
MI is automatically canceled either at the halfway point of the life of the new loan or at 78% of the new loan value, depending on which comes first. However, the lender may opt to cancel any MI policy paid by the borrower at any time.
(20 votes, average: 4.45 out of 5)
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Comments (247)
Jennifer
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I would like to know when this Harp 3.0 loan is coming. We’re underwater on our mortgage and no one will refinance because we currently do not have a FHA, Freddie Mac or Fannie Mae mortgage. Our monthly payments are killing us and we do not want to loss our home. Is this Harp 3.0 a loan that will save our home?
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Cheryl
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Is the HARP 3.0 available now? My sister would benefit with this.
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Ginger
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I would like to enrolled in this program but I keep getting told it isnt in Florida yet.
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Bill
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Sounds like my story. Sucked us in early and now our only options are to overpay or short sale…
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Lynda
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We are hoping HARP 3.0 can help us. We have not been eligible for a loan due to the fact that the income needed to qualify includes income we generate from the use of our home (we rent out 3 of our rooms). Our home is zoned residential and is our primary residence, however we use a portion of it for business…We have never missed a payment and our rates are at 5.75%. Can’t understand why the type of income we receive disqualifies us from every loan program!!
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Susan
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Has anyone heard that the HARP 3.0 will change the cut off date of June 2009 to a later date?
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Robert
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I am like so many others ,I try to get a modification through the bank they put me through eight months if so many hoops and all I got out of that was denied.
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Arkansas Rose
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Same here… people who have done the right thing and try to paid their mortgages on time or got behind by a month are being denied… our refinance was denied because our mortgage payment was only 45% of our total household income… in my opinion that’s a lot, because a person still has to live… with all the insurances going up every year (home, car, medical, prescription, life, etc…) with food and gas prices rising, with no jobs available, and/ or seniors living on a limited income. We tried to do the right thing by managing our money properly… but the only ones getting any help are those who way behind on their mortgages, bought more than they could pay for, bought homes in areas where the pricing went way down, etc… When will the government reward the people who are trying to do the right thing…There should be help for all of us, not just those who have made questionable decisions in their lives.
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Susan Lee
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We bought our home in 2007 , 6.25 interest. Paid $320 500 with 20 percent down. In Aug. 2009 we refinanced for a 5 percent loan. Now we no longer are employed and our income is Social security. Our credit is good and our monthly payments are made on time. But we need to reduce our mortgage payments and I am not sure we will get a high enough appraisal to qualify for 80/20 loan. I pray the Harp 3 will change the June 2009 cut off date as we missed it by only by a few months and need lower payments to make it on social security income.
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dan
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I would like to know the answer to the same question-combining a first and second per Harp3
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Marco A Morales
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How can a get in touch with Senator Barbara Boxer or
Rober Menendez
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Michelle
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does anyone know when the harp 3.0 will come my mortgage is not own by
Freddie or Fannie my interest is 7.25% my mortgage is underwater to
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Joe Kuk
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I have been trying to refinance since the crash. I am in a 5/1 ARM loan with a basement of 6.19 original loan amount was 218K the first was at 85% and the second is a 15 year balloon at 9.23%. Both loans now owed after 6 years is 210K and the Value has never came back over 151900 since the crash of 2008, better yet since it was one of those uninsured Country Wide loans I have been unable to get any help from Bank of America. Due to me seeking help and asking about the HARP 3.0 they sold my loan out in August. I believe that I am going to lose my house once the interest rates start coming back because then even though I been at the basement for so long they are gonna jump my loan as often as they can, because they know I can’t get out of my loan. I should of taken the VA loan when I got financed.
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Gary Medina
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Joe,
If you are not currently being serviced by Bank of America, then you would have to go to an outside source to completely refinance out of the loan you have with them.
Most of my clients are or were BofA borrowers and have successfully refinance them for a lower rate/payment..
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Troy
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So Gary you can refi a non-GSE upsidedown loan serviced by B of A?
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Bud
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Did you say that B of A was willing to work with people to refinance at a lower rate? I have paid $170,00 on my first and second mortgages and have only reduced the principals by about $5,000 over 7 years. My first was bought by B of A and the second is through Select Portfolio Servicing. I am way under water and the home is in bad shape to boot. Followed bad advice when I bought it in 2005 with an interest only loan because the lot is dividable. It is just draining me and keeping me from getting ahead and now my daughter is going to go to college with no savings program for that. Will HARP 3 be available soon and will it help me?
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john marshall
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guess what ive pulling money out of my 401 k paying 20% on my retirement money just to save my house im underwater in at 7% taking more money to start a buisness paying all my bills on time now and i wont even qualify with the 3.0 because they need 2 years of self employment to qualify just like not qualifying for the 2.0 becuase of not having 2 years of self employment, man ill tell you this country is really screwed up i can make my 7% payments on time but dont get the option of making a lower payment and rate because of some dumb rule saying you need 2 years of self employment this is what i get all the while watching neighbor after neighbor walk away from theres because it was the easy way out thanks america mr president and congress im truly ready to give up
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David
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We have been in our home for nearly 10 years and made every payment on time despite being unemployed for nearly a year. Between our first and second mortgages we are at least $200k underwater. Our current mortgage holder says we do not qualify for a modification because are combined mortgages exceed the HARP limitations, we are current and have sufficient income to make the payments. So our options are to continue as is, or stop making payments for 3 months which would trigger our eligibility since we would then be “behind in our payments.” When asked about a refi (our interest is 4.875%) we were referred to another agency. That group said because we are so far underwater no one would want touch us.
How frustrating.
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chinup
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I like Phil am stuck in the middle. Bank won’t help me because they do not have to. I do not have an FHA or Fannie Mae/Freddie Mac. I am hoping HARP3 will do the trick because I cannot hang on that much longer.
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stephanie coleman
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how about mobile home we need help to we paid interest at 8.75 % and are home is own by freddie mae and we paid are bill on time and nobody we help CAN’T get chase bank to help help stephanie coleman
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A dropin the bucket
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H.R. 736 does no sound like it will help my loan owned by a different investor.
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Phil
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I admire all of you for hanging in there and taking whatever action is available. I have a home nearly $200 K underwater. I have paid $400 K in interest since 2006, always paid on time, and have shown the bank (Chase) the highest of integrity in meeting my obligations. I have used all of my retirement to stay current, and even paid ridiculous taxes on what I withdrew early. After 7 yrs of asking for help, and scraping by with my wits and creativity, I just ask for some help. The bank has made an enormous profit on me, yet they remind me I will be in the same position for years to come. They have no interest in helping me, because they dont have to. Just heard that one today. My loan is a private investor one, so all the fed help (HARP 2.0) does not apply to me. I am like the millions in California, who see no hope in site. I will write my congressman and I will keep up the fight in very way possible. Lets hope 3.0 comes soon.
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Kim
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We have been struggling for years. We have a daughter with cerebral palsy (medical appts & therapy) is a house payment alone. At this time our mortgage is at 9.75% which is rediculous! Can’t get any help because we are underwater now. Come on 3.0 and let us qualify when it does approve.. have my fingers crossed.
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Shari Leonard
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We are in the same boat, we are paying 9.365%, bank will not work w/us, when we were on time, no program unless you are behind, when my husband got hurt at work in 2011 and was off for 4 months, unable to make a payment for 3 months, then we weren’t elegible for anyting because we were late, they will not refinance us because we have no equity because we are under water and our house will not appraise. Our loan is not fannie/freddie. They over appraised our house by $20,000 in 2005. They will not change anything because they are draining us blind, I had to cash in my 401K to bring payments up to date. My son also has a disability, and that is why they trapped us in this loan, we were desperate.
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Mkaine
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We need to write our representatives and tell them to support harp 3 and hamp 3 too! There are so many people like us. Plus we need it now while the interest rates are still low!
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stephanie coleman
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how about molbie home need help freddie mae have our loan and cant get help
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Mike F.
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Is the HARP 3 program allowing those that already refinanced through HARP 1 to re-refinance? Interests continue to drop and we have not been able to take advantage of it. Also, is the HARP 3 allowing to combine the 1st and the 2nd mortgage? When we bought our house, we did not have the downpayment and we were able to buy thru an 80-20. The second is at 9.75%, which is killing us.
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Troy
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Did a refi in ’04 and LTV was 78%. Now I am under water by 25%, and have a non-GSE loan. Just want to refi to take advantage of low rates. Loan converts in 2 years and payment will go up by 1/3 and I’ll be out on the streets. Let’s go HARP 3.0!
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jim arnett
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i got divorced in 06/01/2009 and i ended up with the house! well i refinanced it with my credit union and got a mortgage for 30yrs @6%. the following yr i qualified for a refinance then my appraisel came in! my s.e.v. for this house was 200,000.00 total value. my apprasiel came in at 134,000.00!!!!! my balance on the mortgage was 160,000.00. now to the harp 2.0 the only part of that i did not qualify for was i closed 07/01/2009. i missed it by one month you had to have closed before 06/01/2009! i just happened to call a lender today the one that i had qulified with 2 yrs ago and they told me about this harp 3.0. this is what the resposible home owners need! i was also told the l.t.v. might be wavied and possible no appraisel. the lady at my credit union look at my paper work and said that the house was worth what the s.e.v. was listed for. she said we don,t use appraisel,s? all of a sudden when you pay for an appraisel it is not worth the paper it is written on. but if the credit union use their,s it is gold!!!!! do you see what i am saying here? my local tax board denied it too!!! i am very excited to see when this harp 3.0 comes out.
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Bill Hahn
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I refinanced under HARP at the end of 2009 but now my rate is about double the current rate. The funny thing is my house value kept falling the past 3 years but now is back where it was when I made the original HARP loan. My credit score is great but I can’t afford to pay the 25 or 30% it would take to refi without HARP. HARP should have provisions to allow the people that used it early to use it again.
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Mike S.
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Harp 3.0 is desperately needed…I have a private loan, interest only, very upside down. All I want is to refinance the loan to a conventional 30 year like so many others have done. Please help me avoid foreclosure.
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Emjay
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Does anyone know if any bank is offerring Harp 3 yet?
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Stenny
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My wife and I bought our house 7 yrs ago when the market was great for the sellers and not too great for the buyers. We bought our place for $249,500, it got appraised after finishing off the basement 1 1/2 yrs after at $293,00 and to sum it up after everything crashed it is valued at $182,000 now. What to do is the question! We will be staying here forever but we want to lower our rate from 5.25 to what is available now. We never have missed a payment ever and work hard to keep our jobs and do our best for our kids!
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C Martin
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Like so many others, our loan is not backed by Fannie Mae or Freddie Mac. After obtaining help from any outside company, we negotiated a loan modification with our lender-Homecomings (GMAC). Our interest rate was brought down to 6.75% for a 5 year fixed term. That has been 4 years ago. Once the 5 years are up the interest rate can jump as much as 3% on the first month. Then it will be re-evaluated every 6 months at which time they can increase our interest by 1%. With loss of income over the past few years, we can’t afford any increase in our payments. We need HARP 3.0 to go through, in hopes that we will qualify. We do not want to have to walk away. We have less than a year to come up with a solution.
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Chris Buddy
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Tried applying for HARP and I was ineligible. Refi my home in 4/09 Fannie Mae claims 6/1/09 that they took it over. They are valueing my home at 160K and I still owe 166K, so a traditional refi is out of the question too. I have always made my payments and have a 30yr fixed at 5.4% but if I could refi with the new rates and not be rejected because my LTV amount I could be saving $260/month on my mortgage. So please lets get this new program up and running
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Lisa
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I can’t tell you the amount of people we know that have walked away from mortgages, etc Cause it was the easy way out. They are now renting beautiful houses, bought expensive cars before it all caught up with them. The right way – NO!! My husband and I have made every payment on time no matter how hard it can be at times. Its only fair we get to refinance, is that really to much to ask? Go Harp 3.0!! Help those of us that did it right and didnt walk away from responsibilities bc it was easy (Im not talking about those that had job losses, etc..)! All we want to do is save a few bucks each month!!
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