In the latest effort to save homes from foreclosure, Fannie Mae and Freddie Mac have approved a new program called Harp 2.0. This program is really the one that everyone has been waiting for to best help home owners who are underwater.
Being underwater on your mortgage means that you owe more than what the property is worth at today's market value. This happened because of the housing bust that occurred in 2008 and has continued to this day. Borrowers purchased homes during the housing boom at much higher prices than what they are worth today. In addition, mortgage rates at that time were also higher than today. Harp 2.0 addresses both of these issues.
For anyone who has a Fannie Mae or Freddie Mac mortgage, this is the opportunity to reduce your mortgage rate to the record low mortgage rates that are being offered today. In addition, as long as the result of the new mortgage is a monthly mortgage payment that is lower than the original monthly mortgage payment, an appraisal will not be required. Therefore, there will be not LTV, loan to value, to deal with which means market value will not matter. This is the only way that underwater mortgages can be refinanced in today's housing environment which is what makes this a wonderful program.
Another perk of Harp 2.0 is that only one borrower needs to have income. Understanding that many people lost their employment in recent years, this is another positive part of the this program. Even the bankruptcy and foreclosure guidelines for this program have changed. The normal guideline regarding bankruptcies and foreclosures and the time required to gain good credit is waived. Borrowers are also allowed to have one 30 day late payment on their mortgage as long as it did not happen within the last six months.
Each entity, Fannie Mae and Freddie Mac, has their own spelled out guidelines, but on the whole, this looks like it is going to be a successful program which will help many home owners refinance to more affordable mortgage rates without experiencing any of the recent hardships of being turned down because of being underwater. This is the most positive program that has yet to be offered to help home owners retain their property while at the same time reducing their costs.
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