HARPING ON HARP II
HARP II is intended to be an improvement over the original refinance program for Fannie and Freddie. Some things like the ability to go to 125% loan to value are still tricky because lenders may not go along. The one big benefit I see is that the loan level price adjustments can be much lower and that will open up more loans to be refinanced. Not all the changes are implemented yet, but should be in April.
During this time when low rates are so prevalent it would be sweet if everyone could refinance. There are still several things standing in the way for many, for instance if your loan is not Fannie or Freddie owned, or if credit or value is a problem. In these instances HARP II is not going to be the solution.
There is one key oops with HARP II that would have been extremely helpful to so many home owners, a requirement that the second mortgage be automatically subordinated. Since they are in second position already, what is the big deal by staying there for a more favorable loan to the borrower. There are a couple of states that do have this ruling even prior to HARP II.
As I write this I am dealing yet again with a lender who is taking over two months to say yes to subordinating their current second mortgage. This deal has a 70% front end and 81% back end. I've worked with this lender a lot in my career and would not have expected the 20 days they publish as their required processing time, but we could work with it.
After our request was submitted for two weeks, they tell me now they are working on the December 01 requests. Now we are looking at more than two months, and by the way, don't even think of asking for a RUSH. (I wouldn't because they would not recognize it I'm sure.)
(This particular loan does not require an appraisal for the first mortgage, the value was accepted by the automated underwriting system, but the second lien holder if they don't agree can order an appraisal, a further delay. Unfortunately one guide they use is Zillow, (can I insert a LOL here?). I've actually had this lender order an appraisal in a situation where there is NO MAXIMUM loan to value when they would not subordinate, wasting a borrowers money.)
While we wait, the borrower will lose his lock. Fortunately the rates have remained low, although it will cost him something to keep the rate I am sure. Then there is the question of when we may actually get the subordinated second. When they say they are working on Dec 01 requests, that does not mean we are six weeks out because as the customer service person said "they are not allowed to tell us what they think, only the day they are working on".
Most annoying about this scenario is the total lack of concern for someone who has a loan with this company. I cannot imagine a day that I could be so uncaring about a situation my borrower is in. The longest I've waited for a subordinated second was over 4 months. Too bad HARP II did not address this issue in a more logical way.
