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Underwater Home Owners - New FHFA Policy

Most have us have seen the news that President Obama has used his Executive Authority and has handed down his decision to make this program benefit more homeowners that are seeking help and want to stay in their homes. Most homeowners that we have talked with see serious hurdles and frustrations when dealing with the banks when they see that they are on a Fannie Mae or Freddie Mac owned loan and have met all the specific criteria. Even though all of these criteria items are met they are still be turned down.

Here are the major changes that are true benefits for homeowners:

  • Removing the current 125 percent loan-to-value ceiling on refinanced mortgages;
  • Waiving risk-based fees on borrowers who take shorter term mortgages and reducing those fees for others;
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the GSEs;
  • Eliminating certain representations and warranties required of lenders to obtain the GSE guarantee. This will protect lenders from many of the buy-back requirements they face under current guidelines.
  • Extending availability of the program through the end of 2013.

Read more specific detailed information: Click Here

FHFA said the changes to HARP were made with input from lenders, mortgage insurers, and other industry participants. According to The Wall Street Journal, among the concessions made by the industry are agreements from private mortgage insurers to facilitate the transfer of existing mortgage insurance coverage and from most of the major lenders to ease the process of subordinating existing second mortgages to the new loans.

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The guidelines will be finalized on November 15, 2011. However we will not see this loan being implemented until Dec. 1st of 2011. My personal advice is to contact your local loan officer and have him/her get you prepared for this opportunity. I strongly recommend that you use local small mortgage banker / broker person as they will be able to deliver a personal, caring, and be able to answer your specific quesitons.