American Bankruptcy Institute
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Fort Lauderdale Home Affordable Refinance Program Changes Announced.

On behalf of Bankruptcy Law Firm of Clare Casas on Monday, November 14, 2011.

Through the Federal Housing Authority (FHA), President Obama recently announced changes to the Home Affordable Refinance Program (H.A.R.P). This is a program that was meant to help Broward County homeowners refinance their existing adjustable rate mortgages to a fixed rate mortgage. Great? Not.

The Home Affordable Refinance Program was set up to help homeowners who cannot qualify for loans from private companies. The government-owned companies Fannie Mae and Freddie Mac agreed to offer loans at lower rates to borrowers with mortgage debts up to 125 percent of the value of their homes. It was just not realistic in today's market where most homes are valued at 125% under their loan balance.

The most significant change to HARP is the elimination of the 125% loan-to-value requirement for refinances. This allows all homeowners to refinance if they meet the other eligibility criteria - no matter how far their home value has fallen.

Here are the changes announced by FHA:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
    • Removing the current 125 percent loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

Here is the new HARP criteria:

  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
    • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80%.
    • The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 month

That last one is a tough one to meet for most people. If you're behind on your mortgage and want to keep your home, you may have some options in a Chapter 13 bankruptcy. Call today and schedule a free appointment to discuss your case and review your options.

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