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The Home Affordable Refinance Program or HARP has been utilized by many homeowners who were underwater on their mortgage. It allowed them to refinance their home regardless of the loan-to-value (LTV) ratio in most circumstances. Recently, two U.S.Senators reintroduced a bill that would extend the guidelines and reduce fees even more. The new bill was named The Responsible Homeowner Refinancing Act (RHRA) and just like the HARP loan, it is for homeowners who have a mortgage owned by Freddie Mac or Fannie Mae.
Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) sponsored the new version after it was originally introduced on May 10, 2012. It was not accepted and eventually fizzled out according the THOMAS Library of Congress website.
“Passing this bill will get rid of the red tape that leaves millions of borrowers trapped in higher interest loans, puts money back into the pockets of middle class families, and strengthens our economy. I’m asking Republicans to join us in putting families first” says Senator Menendez.
Boxer also stated, “This bill is a win-win-win: homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will be strengthened. That’s why the Menendez-Boxer bill has such broad support from industry and consumer groups.”
Eligibility to be able to utilize the benefits of the new bill include being current on their existing home loan through Freddie Mac or Fannie Mae. The bill would allow them to be able to do the following:
- Currently with the way the lenders have the underwriting criteria set-up, it makes it difficult for the borrower to refinance with a new lender without being scrutinized with stricter underwriting guidelines resulting in increased costs and less desirable terms for the borrowers. With the new bill going into effect it would enforce the GSEs to equalize the guidelines between their current lender to the new lender.
- Under the new bill all borrowers who have been paying their mortgage payments on time will be able to refinance under the revised bill guidelines. Borrowers who are above 80 percent loan-to-value will no longer need to worry about not qualifying for the program or paying more in fees. The benefits of the new bill will be equal for all borrowers who have a Freddie Mac or Fannie Mae loan.
- GSEs will no longer be able to charge up-front fees when the borrower is refinancing a loan that is already guaranteed by them. The previous HARP guidelines were allowing the GSEs to charge more in fees to borrowers with a significant amount of equity. Since they will no longer be able to do this, this gives the borrower more financial freedom.
- With the new bill, the GSEs cannot require borrowers to obtain a manual appraisal, which can cost hundreds of dollars, simply because they live in an area where homes have consistently been selling. Alternatives to borrowers paying for manual appraisals will need to be seeked out by the GSEs instead.
- The new bill will eliminate the need to provide proof of employment and income verification if the borrower is already current on their loan. This will also make the refinancing process flow smoother for both the lender and borrower.
- Another advantage of the new bill is that it will save money for taxpayers by reducing the default rates of existing GSE loans.
The chances for this bill pushing its way through congress are quite high with full legislative support from The Mortgage Bankers Association, National Association of Realtors, National Association of Home Builders and the Center for Responsible Lending.
While the effects of this bill are not yet available it is expected to be announced in the near future. If you are underwater on your mortgage or owe more than your house is worth the keep checking back for further updates and announcements regarding this bill and other HARP 3.0 announcements. Sign up for our Newsletter Below to get instant updates regarding HARP 3 and other mortgage updates or request information below. HNA3F76EBT7C