How to Refinance Your Underwater Mortgage via HARP 2.0

Recent data shows that over 10 million Americans are underwater on their mortgage. Being underwater on a mortgage means that the current market value of the property exceeds the amount owed on the loan. The federal government found that the first HARP program did not help enough homeowners so it has changed eligibility requirements.

Big Change from Harp 1 to Harp 2.0

Harp 2.0 removed the LTV or loan-to-value ratio cap. Under HARP 1, if you owed $130,000 on your mortgage but your property value appraised at $100,000 then you could not refinance. Harp 1 did not allow the ratio between the loan and the property’s value to exceed 125%. The LTV requirement is gone is HARP 2 for fixed-rate mortgages backed by Freddie and Fannie.

Other changes include:

• Elimination of some “risk-based” fees for homeowners
• Waiving some representations and warranties that lenders use to make loans owned or guaranteed by Freddie and Fannie.
• No need for a new property appraisal with a reliable automated valuation.
• Date extension for the HARP program until 12/31/13 for loans originally sold to Freddie and Fannie on or before 5/31/09.

Eligibility Requirements

• Freddie/Fannie guaranteed mortgages only
• Up-to-date on payments
• No minimum credit score, qualifying income, or property appraisal
• Must be underwater or nearly underwater.
• Some double-dips are allowed if homeowner took advantage of HARP 1 during March – May 2009.

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