May 8th, 2012 11:34 AM by Andrew Walter May
Harp 1.0 - miss 2 mortgage payments and get a 2% 40 year amortizing mortgage with you, the borrower, receiving $1,000 bonus checks from the U.S. Treasury. Chance of getting this loan - 1 in 100.
The people that benefitted from Harp 1.0 were the big bank's employees. They went into their underwriter and pounded them. These executives, and people close to the banks that offered these loans benefitted handsomely.
How'd you do? Not so good, right?
So, what about HARP 2.0? We've got a few loans that we're running through the system, and here's what they look like:
1st - no appraisal necessary on Fannie loans (Freddie will go to 105% LTV but requires an appraisal);
2nd - a substantially higher DTI (debt to income) ratio is allowe - think 80% instead of 45% of your income - and you'll possibly qualify.
3rd - no assets necessary.
If this sounds like what got our country into trouble in the first place (the NO DOC LOAN) you are correct. We are doubling down on the NO DOC loan. But, from a strategic standpoint; rather than make new loans to new borrowers and give everyone a home we're letting the people that are hurting get this loan. You must already own the property so you are getting a loan when you probably shouldn't, but at least it prolongs your spiral into a potential foreclosure. It may do more than prolong it, it may prevent it.
So, the "Buy the Vote" (after-all it's an election year) Mortgage, aka HARP 2.0, is a really good program for Fannie Mae loans. A great program for Fredie Mac loans as well....albeit at $425 for the appraisal.
If you want to find out more give us a call. For borrowers that are in trouble we've seen 4.5% or so on the 30 year rates....they obviously vary by situation.