SAN MATEO, Calif. — November 21, 2011 — Consumer money resource Bills.com today released a consumer-focused evaluation and primer on the recently updated Home Affordability Refinance Program guidelines. Dubbed HARP 2.0, the program aims to make refinancing easier and more widely available to the nation's underwater homeowners.
"This program could serve as a lifeline for many of the 11 million homeowners in the US estimated to owe more than the value of their property," said Ethan Ewing, president of Bills.com. "Of course, there are certain qualifications that borrowers must understand as they begin the process."
The Bills.com HARP 2.0 Report provides a detailed look at the changes to the program guidelines and how each will affect individual borrowers. Highlights include:
- Bills.com predicts that most lenders will not close on refinancings until March 2012 when lenders' automated underwriting systems are updated. Any early closings will be manually underwritten and are not protected against buybacks. This means many borrowers will not see immediate relief from HARP 2.0.
- The provisions most likely to help this program be successful:
- Removing the maximum loan-to-value (LTV) ration for HARP refinances
- Limit on lenders' liability if the borrower later defaults
- Elimination of credit & income guidelines for some borrowers
- Allowance of one late mortgage payment in the last 12 months
- Relaxed standards for bankruptcy or foreclosure
- One of the unheralded changes in HARP 2.0 is the new, less stringent requirement for condo refinancing. By removing the requirement that 80% of condo owners in a complex be current on their HOA dues, HARP 2.0 allows owners to refinance regardless of their neighbors' financial situation.
- In some states, refinancing can remove the consumer protections, called anti-deficiency laws, that insulate an underwater homeowner involved in a foreclosure. Bills.com recommends homeowners learn the anti-deficiency laws in their states, and whether a mortgage refinance changes their recourse loan into a non-recourse loan.
In addition, the report examines the context and motivation behind these changes, provides an at-a-glance review of the overall changes, and breakdowns HARP 2.0 eligibility guidelines.