Going forward I plan to keep this blog updated regularly so that it can
become an ongoing resource of information for those of you
interested in the plan, more so than the institutional sites
established by the government or the various banks involved with
the program. What I mean by this is I will continue to
provide you with real-time, real-life information about the program
and avoid the sales pitch and some political correctness.
My observation so far is that I like the program. It is
going to save a lot a people a lot of money and, done right, it
appears that the initial portion of the HASP won’t cost the
taxpayers anything, the operative word being “appears”.
The HASP is really two programs, a refinance program and a
loan modification program. From now on I’m going to refer them as
HASP version 1.0 and
HASP version 2.0. It’s
version 1.0 that open for business today and, from what I’ve seen,
I really do like it.
Essentially, HASP 1.0
allows borrowers with excellent credit to refinance their mortgages
at today’s rates, even if the equity in their homes is no longer
there. In fact, HASP 1.0 will allow you to refinance your
home up to 105% of the property’s value. You are even
allowed to roll your closing costs into the refinance and, if you
have a 2nd mortgage, that debt is not
included in the formula. For example:
Home Value =
$100,000
Current
1st Mortgage =
$95,000
Current
2nd Mortgage =
$50,000
Therefore, the loan-to-value or LTV, the ratio of the 1st mortgage divided by the value of the home, is 95% ($95,000/$100,000). The combined loan-to-value, or CLTV, the ratio of the 1st mortgage and 2nd mortgage added together divided by the value of the home is 145%. ($95,000 + $50,000 = $145,000 / $100,000).
Even though the combined loan-to-value well exceeds the 105% HASP limit, because the 1st mortgage is under the 105% limit it can be refinanced. Even if the closing costs were to add an additional $10,000 in points and fees, the loan would still work
under the HASP guidelines.
With all that said, if you have a
2nd mortgage there will be complications. I will deal with these issues in my next posting.
For today, THE most important thing for you to do is find out if your loan is owned by
Fannie Mae or Freddie Mac. These Government Sponsored Agencies (GSE’s) own the vast majority of mortgages today. However, just because your loan is less than $417,000 (the GSE’s basic loan limit) DO NOT ASSUME YOU MORTGAGE IS OWNED BY ONE OF THESE GSE’S!!
In many instances they are not. They are owned by other investors and, as a result, they are not going to work with HASP 1.0. In all likelihood, however, they will work for HASP 1.1 or 1.2, 1.3, meaning as this program evolves I believe that the program will expand.
In addition, just because your loan is larger than $417,000 DO NOT assume that your loan is Not Owned by one of the GSE’s, as up until the end of 2008 loans to $729,250 were purchased by these agencies.
The bottom line is simply check to see if your loan is owned by one of the GSE’s. For your convenience I have included links to their sites at the end of this posting so that you can quickly find out if your loan is one of them.
Please, start here, by checking to see if your loan is owned by one of the GSE’s. If it is, contact me or your lender to see if you meet the remaining qualifications of the
program. Randy@LifetimeParadigm.com
If your loan is not owned by one of the GSE’s you will need to wait for the HASP to
expand. Again, I believe that this will happen over the weeks and months ahead (HASP 1.1, HASP 1.2, etc).
Meanwhile, please, continue to make your mortgage payments on-time because if you are late with a payment you will not qualify.
In summary:
HASP 1.0 – The Refinance Program
Investors: Fannie Mae or Freddie Mac
Property types: Primary Residence, 2nd/Vacation Home, Investment/Rentals
Loan Amounts: $729,750 or less
LTV (Loan-to-Value) Maximum: 105% and an appraisal may not be needed
CLTV (Combined Loan-to-Value): Unlimited, only the 1st mortgage is refinanced
Income Documentation: Stated (Meaning you do not need to provide documentation, not meaning you get to state any income you like. These loans are for qualified borrowers with good credit)
Credit Profile: Excellent credit is required
HASP 2.0 – The Loan Modification Progam
Investors: Fannie Mae or Freddie Mac
Property types: Primary Residence Only
Loan Amounts: $729,750 or less
LTV (Loan-to-Value) TBD in future posts
CLTV (Combined Loan-to-Value): TBD in future posts
Income Documentation: Fully Documented (The goal is to make your home affordable, very affordable. Details to follow)
Credit Profile: Your credit can be in the toilet! Seriously, I read that
can in in foreclosure or possibly bankruptcy and this plan can work for you. “Yes we can”?
It’s a good life!
Randall A. Luebke RMA, RFC
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I have been in the mortgage / real estate business for 23 years. I read constantly, listen to podcasts and learn a ton from my clients. Re: the HASP, I was so…. excited when the program was lost I looked everywhere for information regarding it. Sadly, the lenders did not have the same enthusiasm about the program. I sense they want it to fail and they will work to get the result they want.
Thank you for your comments!
Randy Luebke RMA, RFC
Info@Rebiz.com
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Randy Luebke RMA, RFC
Info@REbiz.com
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Will property rebound or is the market about to take another tumble. I think property shares have bottomed and in six months the actual property market will be on the up.
Real estate is local, unlike the stock market which is universal. What I mean by this is a share of IBM purchased by someone in Maine is the same as a share purchased by someone in Moscow. Location does not matter. In real estate location matters. Unfortunately, the media likes to report on real estate as they do on the stock market and it just won’t work. Real estate is priced neighborhood by neighborhood and, frankly, home by home as a one home in a neighborhood may be more desireable than another due to its condition or location within the neighborhood. Real estate is very, very local.
My point is that to answer your question properly I would have to say that some neighborhoods will decline while others will appreciate in the near future. In fact, there are neighborhoods that have never lost any value since the “peak” of the real estate market in 2006. That said, there is a HUGE overhang of properties in foreclosure and a similar amount of homes that should be. Those homes have to be sold and those sales have to compete with others who actually want to sell their homes, the normal resale market.
My belief is that, in general, there is little chance for home appreciation next next and a bigger chance that they will decline. Personally, I am shopping for a new home and I’m in no hurry. I would buy tomorrow if I found the right property, however, I will wait until I find it.
Thank you for your comments!
Randy Luebke info@REbiz.com
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What would be your top three tips for anyone new to this topic?
1-Healthy skeptisim is good for you
2-If you are in a situation where you want to refinance or modify your mortgage DON’T hire anyone to do if for you if they require payment in advance.
3-We need to elect better, smarter officials because the degree of the problems caused by the mortgage industry is simply a combination of ignorance, incompetence and greed.
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