Nav Thakur

Refinance with Harp

October 16, 2014 | Harp  |  3 Comments



Despite falling mortgage rates, homeownership costs increased through this year’s second quarter.
For the first time since 2008, fewer than 63% of U.S. homes were affordable to households earning the national median income, assuming a 30 year fixed mortgage interest rate and modest down payment.

With home prices expected to rise into 2015, is now the right time to buy a home for maximum affordability? A lot will depend on low mortgage rates and the future of low- and no-downpayment mortgages.

Home Affordability Drops In Second Quarter of 2014
The National Association of Home Builders released its Housing Opportunity Index (HOI) for this year’s second quarter and it shows that homes are, generally, less affordable today as compared to three months ago.
The Housing Opportunity Index is a quarterly gauge of home affordability which tracks the typical U.S. household’s ability to purchase the typical U.S. home. Data is collected across 225 metropolitan areas.

To determine whether a home is “affordable”, the NAHB first gathers the median home sale price for an area, then identifies the average 30-year fixed rate mortgage rate during the period, and, finally, projects what a typical housing payment would be.
An”affordable” home is one for which the front-end debt to income ratio is 28% or less of the area’s median household monthly income. The front-end debt-to-income ratio is calculated as (total housing payment) divided by (total monthly gross income).

The index also assumes conventional financing via Fannie Mae or Freddie Mac, plus a ten percent home downpayment.
Last quarter, 62.6 percent of U.S. homes were affordable for households earning the national median income of $63,900. The reading marks a 2.9 percentage point decrease from the quarter prior and is the lowest affordability ranking since the third quarter of 2008.

Not coincidentally, Q3 2008 was the quarter during which the U.S. economy began its slide into recession. During September of that year, Fannie Mae and Freddie Mac were taken into conservatorship ; Lehman Brothers failed; and Merrill Lynch was bought by Bank of America.

Affordability has been steadily lower as the housing market has recovered :
• Q2 2012 : 73.8 percent
• Q2 2013 : 69.3 percent
• Q2 2014 : 62.6 percent

Since two years ago, the median U.S. home sales price climbed 16% to $214,000, average mortgage rates are up 39 basis points (0.39%); and, the median U.S. household is mostly unchanged.

Going forward, home values are expected to keep rising and household income is expected to remain flat. The determining factor for future home affordability, then, is U.S. mortgage rates. Thankfully, rates have been on decline.
Since the start of this year, 30-year mortgage rates have dropped closed to one-half percentage point and 15-year mortgage rates have dropped by about the same. The cost of carrying a loan is low relative to where it was at the New Year.

Many lenders now quote rates in the 3s. As mortgage rates drop, home affordability can increase. Rates may continue dropping through the fall months, and into the winter season.

California Least Affordable; Midwest Most Affordable

Like all things in real estate, home affordability varies by area. Home prices, mortgage rates and household incomes all vary by metropolitan markets, and so does the Home Opportunity Index.

Midwest markets dominated Q2 the Housing Opportunity Index. California markets fared poorly.
Last quarter’s most affordable housing market was the Cumberland area of Maryland and West Virginia. 97.2% of all homes sold in the area were affordable to households earning the area’s median income of $54,100. Roughly twenty thousand people live in the Cumberland region.

Other cities which ranked high for affordability last quarter included Kokomo, Indiana (96.1%); Davenport, Iowa (92.3%); Battle Creek,
Michigan (92.2%); and Lima, Ohio (92.0%)
The most affordable “big” market city the Indianapolis, Indiana area. The Indiana capitol posted an affordability ranking of 89.3%.

Meanwhile, for the 7th consecutive quarter, the San Francisco-San Mateo-San Jose, California area ranked last of 225 metropolitan areas in terms of home affordability.

Just 11.1% of households can afford the Bay Area’s median home sale price of $880,000 despite a median household income of $100,400.
Other low-ranking cities included Santa Cruz, California (16.6%); Napa, California (17.1%); and, Orange County, California (17.6%).
New York City’s affordability ranking was #218.

Home affordability is slipping. Prices for homes are rising faster than mortgage rates can drop. Buyers should take note. Consider writing that offer soon. By the end of year or 2015, home affordability may be even worse.


New Office Lingo

March 28, 2014 | Funny  |  Leave a Comment

Some interesting office clichés and terminology that I recently ran across most of which I have not heard of before. As with every generation slang words evolve but surprisingly I’m feeling a little old not knowing these terms. So if you also have not heard of these before you have some new hip lingo to start using around the office.

Action items: Essentially just a list of things that need to get done.

Hard stop: One that’s oft-used in journalism as well. It means you have to stop a meeting at a specific time as you have another appointment that you can’t move or be late to. “I have a hard stop at 11 a.m.”

Over the wall: You are in the know. You have information that others don’t.

Parking lot: To put an end to a conversation with the idea of coming back to it later. “Let’s put that in a parking lot and move on.” Giving an idea “some air,” or time to resonate, is similar.

Dig out: To get through all your backlog of work. “Let me dig out and I’ll come see you in an hour.”

Circle back: To re-evaluate something or give it a second look. You can also circle back – or re-connect – with a person to solve an issue. “Let me circle back with Bob and I’ll let you know.”

Deep dive: Giving a thorough analysis.

Horses for courses: Acknowledging that there may be more than one strategy or approach that will work. “There is more than one way to skin a cat,” would be the closest idiom.

Pigs get fat, hogs get slaughtered
: Don’t be overly greedy, lest you get the chop. Sort of an anti-Gordon Gekko. This one I heard Mark Cuban owner of the NBA Dallas Mavericks team say referring to the NFL and thinking they were getting greedy.

Touch base: To make contact or catch up. “Let’s touch base later today.”

Give me a buzz
: “Call me.”

Ping: Similar to a buzz, except it doesn’t have to be a phone call. You can “ping” someone through any means of contact.

Ready, fire, aim: The idea of being aggressive and moving quickly without over-thinking. Some eggs will likely get broken, to explain one cliché with another.

Get alignment: To get everyone on the same page.

30,000 foot view: The abridged version of an issue. You don’t want every detail, but just a general idea of what’s happening.


A common misconception among homebuyers is that you’ll need 20 percent down in order to qualify for a home mortgage. This is untrue. You don’t need to make a 20 percent down payment.

In fact, not only do you not need 20 percent down, but no money down mortgages are still available to millions of U.S. buyers.

Today’s home buyers have plenty of choices when 20 percent down is not an option.

What is a Down Payment?

Let’s start with the differences between down payment and earnest money deposit.

Earnest money is a deposit made on the home you want to buy. It’s generally paid at the time an offer is being submitted as a sign that you are earnest (i.e. serious) about wanting to buy the home.

A down payment, on the other hand, is a percentage of the sales price that a lender requires the home buyer to pay when you buy the home. Down payments can come from a bank account, a stock fund, an inheritance, or a retirement portfolio.

Down payments can also come from a family member in the form of a gift.

Down payment requirements will vary based on your loan. Loans for a primary home will have different down payment requirements as compared to secondary or investment home.

The type of loan you choose can affect your minimum down payment, too.  Conventional, FHA, VA, and Jumbo loans each feature varying down payment requirements, and the property type of your home will play a role, too.

Mortgage Options with Less Than 20% Down

Down Payment for Conventional Loans: 5%

Probably the most used is the Conventional Loan which requires a minimum 5 percent down payment on a home. And because the down payment is less than twenty percent, private mortgage insurance (PMI) will be required.

PMI can be paid monthly with the mortgage; in a lump-sum at the time of closing; or the cost can be offset by taking a higher mortgage interest rate which is known as (LPMI) Lender Paid Mortgage Insurance.

In general, the smaller your down payment and lower your credit score, the higher your private mortgage insurance rate will be.

Down Payment for FHA Mortgage Loans: 3.5%

Backed by the government, FHA loans have been popular with U.S. buyers since their launch in 1934.

FHA loans require just a 3.5 percent down payment and are often more appealing than comparable conventional loans because of their less stringent route through underwriting. FHA loans are more forgiving with respect to credit scores, income and assets.

The FHA loan’s flexible underwriting standards make it an appealing financing option — especially for first time homebuyers.  However now with the recent changes in FHA costs in regards to the upfront mortgage insurance and monthly mortgage insurance along with income qualification requirements, FHA at least for the time being may not be the best option. 

Down Payment for FHA $100 Down Programs: $100

Available to most U.S. buyers, the FHA features a special “$100 down” loan with accompanying low mortgage rates.  You can buy HUD-owned homes at steep discounts. In order to use the $100 down program, buyers must purchase a home which was previously financed via the FHA and which has since moved into foreclosure.

Your real estate agent or I can help you get a list of homes that qualify.

Down Payment for VA Mortgage Loans: No Down Payment

The VA loan is another government-backed loan. Guaranteed by the Department of Veterans Affairs, it’s a program allowing for no down payment whatsoever.

To be eligible for a VA loan, you must have served in the U.S. Armed Forces, or have been a member of the National Guard or Reserves. In some cases, spouses of deceased veterans are eligible as well. VA underwriting is very similar to FHA underwriting in terms of leniency.

However, VA loans stand apart because they require zero down payment and no mortgage insurance whatsoever.

Down Payment for USDA Loans: No Down Payment

The U.S. Department of Agriculture (USDA) also offers a zero-down payment mortgage.

The USDA’s Rural Housing loan is meant to help people buy property into non-urban areas nationwide. Most “modest homes” are eligible and homeowners are generally restricted to a “modest income”. USDA loans are available in all 50 states and underwriting guidelines are similar those with the FHA and VA.

There is a small mortgage insurance premium associated with USDA loans which less than with a comparable FHA loan and higher than a comparable VA loan.

Then there is also the 80/15 that has no mortgage insurance

Splitting up your conventional loan into two loans to avoid the monthly mortgage insurance may make sense but ultimately once you are ready to buy the decision will be easy.  Numbers don’t lie and you’ll be able to see in black and white which option is best for you.

How Much Down Payment Should I Make?

When trying to determine how much to put down on a home, in addition to the minimum down payment requirements, it’s important to understand how your down payment will affect your monthly mortgage payment and obligation.

Old school or like my parents would say put 20% down and have no mortgage insurance because mortgage insurance is a rip-off.  Of course the larger the down payment the lower the loan amount resulting in a lower monthly payment.  However using all of your savings to move into a home isn’t always the best route to go financially.  There are plenty of other costs of moving into a new home which people fail to recognize or even admit.  For example you may have landscaping expenses, getting new furniture, blinds, TV’s, appliances the list is endless. 

Do your homework on down payment options. Compare today’s mortgage rates and mortgage programs and see for what program’s you’re eligible. At today’s low rates, there are a lot of terrific choices. 

Most importantly though in today’s low supply of houses the number one thing is to make sure you are qualified and get approved for a loan before your serious house hunting goes.  It’s as simple as supply and demand and with inventory of homes that are out there homes are not staying on the market for more than 30 days. 

The people who are prepared and move fast and 100% sure on what price they will get approved for are the ones that tend to swoop in and get the best houses.  As I tell my wife “The Early Bird Gets The Worm”

To find out what programs best fit you call me directly at 314 275-0418 or email me at


VA Loans

February 10, 2014 | VA  |  1 Comment


A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required.

A VA home loan can be used to purchase a home or refinance an existing mortgage.

Did you know that more than 27 million veterans and service personnel are eligible for VA financing, yet most aren’t aware it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement?
VA Does Not Offer Loans Directly and Does Not Guaranty You Will Qualify.

VA does not actually lend the money to you directly. They offer a guaranty to a lender that if you should default on the loan, they will pay the lender a percentage of the loan balance. The word GUARANTY does not actually guaranty the veteran will qualify for a VA home loan.

Primary Benefits of a VA Home Loan:
100% financing
No monthly private mortgage insurance is required
There is a limitation on buyers closing costs
The loan is assumable, subject to VA approval of the assumer’s credit
30 year fixed loan
Seller can pay up to 4% of the veterans closing costs and even pay down your debt to help lower your debt-to-income ratio
Interest rates are similar to FHA rates
You don’t need perfect credit

Who is Eligible for a VA Home Loan?
Veterans with active duty service, that was not dishonorable, during World War II and later periods, are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.
Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days of active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.

VA Documentation Needed:
The three specific pieces of documentation a lender will need to determine your eligibility is a DD214 for discharged veterans, a statement of service for active military personnel, and a certificate of eligibility (COE) to determine you have VA entitlement.

Because each lender has different qualifying guidelines, the next step is to find out if you meet their qualifying criteria such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county’s maximum loan amount is. And a certificate of eligibility Will be needed which I can help get for you.

Frequently Asked Questions:

Q: Are the children of a living or deceased veteran eligible for the home loan benefit?
No, the children of an eligible veteran are not eligible for the home loan benefit.
Q: How can I obtain proof of military service?
Standard Form 180, Request Pertaining to Military Records, is used to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is NOT processed by VA.
Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.
Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit.



WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the January edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. The latest data show progress among key indicators.   In 2013, home sales had their strongest performance in several years, foreclosure starts were at their lowest annual level since 2005 and homeowners’ equity is up $3.4 trillion since the beginning of 2012. While this scorecard notes positive trends in the housing market, officials caution that the economy is still healing from the Great Recession. The full Housing Scorecard is available online at

“The January Housing Scorecard shows that the Obama Administration’s efforts continue to have a positive effect on the housing market,” said HUD Deputy Assistant Secretary for Economic Affairs Kurt Usowski. “In 2013, the number of U.S. properties which started the foreclosure process was down 33 percent from 2012, while sales of previously owned homes rose by 9.1 percent. With foreclosures down, home sales up, and equity continuing to grow, the housing market continues to make slow, but steadily improving progress.”

“This month’s Housing Scorecard shows the continued need for and progress of the Making Home Affordable program,” said Treasury Acting Assistant Secretary Tim Bowler. “January’s Making Home Affordable (MHA) report shows a steady increase in the cumulative number of homeowners receiving permanent mortgage modifications, while more than 258,000 homeowners have found alternatives to foreclosure, participating in a short sale or deed-in-lieu through the Home Affordable Foreclosure Alternatives Program (HAFA).”

The December Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:

  • Existing Home Sales Continue to Make Gains.  In 2013, there were 5.09 million sales of existing homes–9.1 percent higher than in 2012 and the strongest performance since 2006 when sales reached an unsustainable level during the housing boom. A total of 428,000 new homes were sold in 2013, which is 16.4 percent above sales in 2012 and the highest level in 5 years.
  • Foreclosures Are Down.  According to Realty Trac, a total of 747,728 U.S. properties started the foreclosure process in 2013, down 33 percent from 2012 to the lowest annual total since 2005. A total of 462,970 U.S. properties were repossessed by lenders (REO) in 2013, down 31 percent from 2012 to the lowest level since 2007.
  • Equity Continues to Grow.  According to the Federal Reserve, the equity homeowners have in their homes (total property value less mortgage debt outstanding) is up $3.4 trillion, or 55 percent from the beginning of 2012 through the third quarter of 2013.
  • The Administration’s foreclosure mitigation programs continue to provide relief for millions of homeowners as the recovery from the housing crisis continues.  Over 1.9 million homeowner assistance actions have taken place through the Making Home Affordable Program, including more than 1.3 million permanent modifications through the Home Affordable Modification Program (HAMP), while the Federal Housing Administration (FHA) has offered more than 2.1 million loss mitigation and early delinquency interventions through December. The Administration’s programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals nearly 4.0 million proprietary modifications through November (data are reported with a 2-month lag). In all, more than 8.0 million mortgage modification and other forms of mortgage assistance arrangements were completed between April 2009 and the end of December 2013.
  • Performance of HAMP modifications continues to improve over time.  For modifications seasoned 24 months, 23.6 percent of modifications started in 2011 have disqualified, compared to 28.6 percent of modifications started in 2009. Program data supports that the longer a homeowner remains in HAMP, the more likely he or she is to keep up with their mortgage payments and avoid foreclosure.
  • Payment reduction is a strong driver of permanent modification sustainability.  For example, of modifications seasoned 24 months, only 15.9 percent with a monthly payment reduction greater than 50 percent have been disqualified due to missing three payments.  By contrast, those modifications with a payment reduction of 20 percent or less had a disqualification rate of 41.2 percent.

Also featured this month in the Administration’s Housing Scorecard is a regional spotlight on market strength in the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area (San Francisco MSA). Like many areas across the country, the economic and housing market conditions in the San Francisco area are improving, but the foreclosure crisis has taken its toll, with the Oakland metropolitan division experiencing more distress than the rest of the MSA. The Administration’s broad approach to stabilize the housing market has been a real help to homeowners throughout the San Francisco MSA. You can read the report here.

“As the housing market continues to improve nationwide, the San Francisco metropolitan area is also showing signs of significant improvement,” said Usowski. “As the regional spotlight shows, from the launch of the Obama Administration’s assistance programs in April 2009 through December 2013, nearly 73,500 homeowners in the San Francisco metropolitan area have received assistance. This is a positive step in our recovery efforts, but more work must be done to help homeowners in this area struggling from an excess of housing construction and unsustainable mortgage lending in the years leading up to the housing crisis and recession.”

The Housing Scorecard Regional Spotlight features data on the health of the San Francisco MSA housing market and impact of efforts to help homeowners at the local level including:

  • The foreclosure crisis has had an asymmetrical impact on the San Francisco MSA.  The Oakland Metro Division (MD) has fared less well than the other divisions. During the housing bubble, home price appreciation in Oakland peaked earlier and rose higher than the MSA as a whole, but the subsequent decline in home prices was greater for Oakland (45 percent) than for San Francisco (22 percent) and that of the nation (30 percent).  From 2000 through 2006, the share of distressed mortgages in the San Francisco MSA–those 90 or more days delinquent or in the foreclosure process—were considerably lower than comparable shares in the rest of the nation. The impact of the 2007-2009 recession, however, was more severe for the San Francisco MSA than for the nation, adding to rising mortgage delinquencies.
  • Economic and housing market conditions in the San Francisco MSA are improving.The share of mortgages that remain underwater has dropped to 2.5 percent in the San Francisco MD as of the third quarter of 2013, down from 9.0 percent a year earlier; in the Oakland MD, negative equity has declined to 13.9 percent from 29.7 percent over the same period. Jobs in the MSA have been increasing at an average annual rate of 38,900, or 2.1 percent, from the second quarter of 2010 through the third quarter of 2013. The Administration’s broad approach to stabilizing the San Francisco housing market has contributed to the improvements as nearly 73,500 homeowners received mortgage assistance between April 2009 and December. Furthermore, the San Francisco MSA has benefitted from $36 million in funding from the Neighborhood Stabilization Program, and the State of California has received $1.975 billion from the Hardest Hit Fund program.
  • The National Mortgage Servicing Settlement is continuing to provide relief for those in the San Francisco metropolitan area and throughout the state of California. Under the landmark National Mortgage Servicing Settlement, more than 186,000 California homeowners have benefitted from over $20 billion in refinancing, short sales and completed or trial loan modifications, including principal reduction on first and second lien mortgages provided as of June 30, 2013. Nationwide, the settlement has provided more than $51 billion in consumer relief benefits to more than 643,000 families. That is in addition to the $2.5 billion in payments to participating states and $1.5 billion in direct payments to borrowers who were foreclosed upon between 2008 and 2011.

Funding helps gain critical employment/life skills to compete for decent jobs

KANSAS CITY, KS – The U.S. Department of Housing and Urban Development (HUD) today awarded $192,574 in grants to help public housing residents in Missouri to gain access to education, job training, and employment.  HUD’s Public Housing Family Self-Sufficiency Program (PH-FSS) helps public housing authorities across the country to hire or retain more than one thousand program coordinators who will work directly with families to connect them to the supportive services that meet their individual needs and to become gainfully employed.

HUD recently awarded an additional $1,230,782 to public housing authorities in Missouri, allowing them to hire or retain twenty-eight service coordinators to help families participating in the Department’s Housing Choice Voucher Program.





Housing Authority of Kansas City, Missouri


Housing Authority of Saint Charles


Housing Authority of the City of Columbia, MO


St. Louis Housing Authority



“This is a modest investment that can make a world of difference for families looking to find their path to self-sufficiency,” said HUD Secretary Shaun Donovan. “As America’s economy continues to recover, it’s critical that we work to make sure every American has the skills and resources they need to successfully compete for jobs in the 21st Century.”

“Funding through the Family Self-Sufficiency Program ensures the continuity of services for individuals and families to obtain skills necessary to achieve self-sufficiency,” added Region VII Regional Administrator, Jennifer Tidwell.

The program coordinators retained or hired through HUD’s Family Self Sufficiency programs work directly with residents to connect them with local organizations that provide education and job training and placement opportunities; as well as childcare, counseling, transportation and computer and financial literacy services available in their community. These programs encourages innovative strategies that link public housing and voucher assistance with other resources to enable participating families to find employment; increase earned income; reduce or eliminate the need for rental and/or welfare assistance; and make progress toward achieving economic independence and housing self-sufficiency.

Participants sign a five-year contract that requires the head of the household to obtain employment and no longer receive welfare assistance at the end of the five-year term. As the family’s income rises, a portion of that increased income is deposited in an interest-bearing escrow account. If the family successfully completes its FSS contract, the family receives the escrow funds that it can use for any purpose, including paying educational expenses, starting a business or paying debts.


Super Bowl Appearances vs. Real Estate Prices
Super Bowl and Real Estate Facts

Here are more facts that indicate a correlation between Super Bowl appearances and real estate prices:

The 10 teams that have been to the Super Bowl the MOST come from cities with an average median home price of $339,800. These cities have home prices that are an impressive 40 percent higher than the average median home price of cities with NFL teams, $243,341.
The 13 teams that have been to the Super Bowl the LEAST come from cities with an average median home price of $231,985. These cities have home prices that are 5 percent lower than the average median home price of cities with NFL teams.

See for yourself how the Super Bowl appearances of NFL teams stack up against the real estate prices in their respective cities:





































































































Comparison to the 2013-2014 NFL Playoffs

If there really is a correlation between real estate prices and Super Bowl appearances, there is no better proof of it than the matchups in the conference championship games coming up this weekend. Interestingly, all four of the teams playing in the semi-finals of the 2013-2014 NFL season come from cities with comparatively high real estate prices. Three of these teams, the 49ers, the Patroits, and the Broncos, can be found in the above infographic. Housing prices in their home cities range from $244,600 (Denver) to the exorbitantly high $751,600 (San Francisco). The only team not found in the above infographic, the Seahawks, also come from a city with famously high real estate prices.

Regardless of who wins in the upcoming conference championship games, two teams from cities with comparatively expensive housing are guaranteed to play in the Super Bowl!
Is There Actually a Correlation Between the Super Bowl and Real Estate?

Despite the validity of the facts listed throughout this article, we can conclude that there is no correlation between Super Bowl appearances and real estate prices. As you can see in the below graph, there is nothing to indicate that there is a linear relationship between the two.

Graph mapping Super Bowl appearances and the median house price of the cities with NFL teamsAs most knowledgeable football fans probably noticed, three of the NFL’s most successful teams – the Green Bay Packers, the Pittsburgh Steelers and the Dallas Cowboys – are notably absent from the above graphic. They were omitted because of their home cities’ relatively low real estate prices. The highest median home price between these three cities, $135,600 in Dallas, is still around $80,000 below the national median home price!

Football fans in Seattle and New York, cities with astronomical real estate prices, should also be quick to point out that the correlation doesn’t exist. If high real estate prices really did guarantee Super Bowl appearances, teams like the Seahawks and the Jets would have excellent chances of going to The Big Game each season!



HARP 3.0

December 3, 2013 | Harp  |  9 Comments


At the start of December, Congress will likely confirm Mel Watt as the new Director of the Federal Housing Finance Agency (FHFA). Watt would replace current FHFA Director Ed Demarco.

As head of the FHFA, Watt would helm Fannie Mae and Freddie Mac and would be in custody of the popular Home Affordable Refinance Program (HARP). HARP helps underwater homeowners refinance to low mortgage rates that would otherwise be unattainable.

Under Watt, the program sometimes known as “The Obama Refi” is expected to receive a facelift in order to help qualify more U.S. households for the program.

HARP : A Brief Summary Of The Program

The Home Affordable Refinance Program (HARP) was first launched in 2009 as an economic stimulus program; a way to boost consumer spending.

At the time, mortgage rates were falling to new lows, but at the same time, home values were in retreat. Falling home values pushed huge numbers of U.S. homeowners over the benchmark 80% loan-to-value threshold which meant that to refinance their mortgage was impossible without either (1) reducing the loan balance back to 80 percent of the home’s appraised value, or (2) paying private mortgage insurance (PMI).

Neither option was attractive in the tight, late-decade economy. To spur refinance activity, therefore, and to help jumpstart consumer spending, Congress created HARP.

HARP is a refinance program for homeowners who have lost home equity since the date of home purchase; its main trait is that the program waives PMI requirements for homeowners who once had 20% home equity, but now had less.

Via HARP, homeowners can refinance to current mortgage rates without having to pay mortgage insurance.

HARP Eligibility Requirements

There are 3 basic requirements to be HARP-eligible :

  1. Your loan must have been securitized by Fannie Mae or Freddie Mac
  2. Your loan’s note date must be no later that May 31, 2009
  3. You must have made your last 6 mortgage payments on-time, with no lates

These standards cast a wide net over the U.S. populace and, between 2009-2011, homeowners closed on one million loans HARP loans. The government deemed this good progress, but not great progress. So, in late-2011, the HARP program was revamped and expanded to help reach additional U.S. households.

The main features of HARP 2.0 program are that it waives home appraisal requirements, ignores loan-to-value restrictions, and gives homeowners the right to refinance with any mortgage lender nationwide.

Under HARP 2.0, more Obama Refi loans closed in 2012 than during the program’s first three years combined. This year, more than 1.2 million HARP loans are expected to close.

However, even as HARP 2 remains popular with U.S. homeowners, Congress has been discussing ways to make HARP even more inclusive; ways to expand the program’s reach to households who currently fall outside of the program’s basic eligibility standards.

Momentum behind so-called “HARP 3.0″ is now gaining steam. If the program comes to pass as part of Mel Watt’s confirmation to the FHFA, here are four changes HARP 3 may include.

HARP Change 1 : Refinance Alt-A, Subprime Loans Via HARP

In today’s mortgage market, Fannie Mae, Freddie Mac, and the FHA control more than 90% of all new mortgage origination. However, this wasn’t always the case.

Last decade, non-government mortgage lenders commanded a large share of the mortgage market and Alt-A mortgages were among the most common loans they made.

Alt-A mortgages were typically referred to in acronym or shorthand :

  • SISA loans (Stated Income, Stated Assets)
  • SIVA loans (Stated Income, Verified Assets)
  • Lo-Doc loans (Low Documentation Loans)
  • No-Doc loans (No Documentation Loans)

Despite high profile default rates, there are still large numbers of “performing” Alt-A loans with Alt-A homeowners who are underwater and unable to refinance via HARP like their conforming homeowner peers.

The same is true for sub-prime borrowers who are similarly locked up.

The case for opening HARP 3 to Alt-A and subprime borrowers becomes especially clear when we consider that the 30-year fixed rate mortgage was cheaper from non-government lenders in 2005 than via Fannie Mae or Freddie Mac.

Large numbers of “prime” homeowners used sub-prime loans in 2005 because the mortgage rates were cheaper.


HARP Change 2 : Allow The “Re-HARP” 

Since HARP was first announced in 2009, the average 30-year fixed rate mortgage rate has dropped close to two percentage points. The drop in rates has been a slow one, however.

Rates were in the 5s in 2009 and 2010; fell to the 4s in 2011; and lived in 3s for parts of 2012 and 2013.

Meanwhile, HARP guidelines state that the program may only be used once per household. Therefore, underwater homeowners who used HARP to refinance in 2009 are “stuck” with their HARP mortgage rates from 2009.

Similarly, homeowners using HARP in 2010 are stuck with their HARP mortgage rate from 2010; and homeowners from 2011, and so on.

This one-use restriction takes on added significance since the Federal Reserve launched its third round of qualitative easing (QE3) in September 2012, a program through which the nation’s central banker aims to lower U.S. mortgage rates as far as possible.

Today’s mortgage rates are near 4.25%. Homeowners who HARP-refinanced in 2009 to 5.50% are unable to “re-HARP” to something better .

Should HARP 3 pass, it could implement a feature of the popular FHA Streamline Refinance program — it could give homeowners program-eligibility after 6 payments have been made to the bank. Until then, HARP is one-use only.

HARP Change 3 : Change Cut-Off Date From May 31, 2009

Another HARP 3 change that could put the Home Affordable Refinance Program within reach of more people would be a change in the program’s cut-off date.

Currently, HARP’s eligibility standards require all HARP-refinanced mortgages have a note date of, or prior to, May 31, 2009. This is because — according to a Fannie Mae representative — homeowners whose mortgages come from after this date knew what kind of housing market into which they were buying.

The inference is that HARP was conceived to help homeowners who didn’t know any better.

Even so, among the homeowners who did know better, and still bought a home post May 31, 2009, the spirit of the HARP program should still apply. Many of these homeowners made 20% downpayments and those downpayments have since been lost to the housing downturn.

To help make HARP more uniform nationwide, HARP 3 could be extended to include homeowners refinancing a primary residence for which the mortgage was the note date is post-May 31, 2009. There are many homeowners with mortgages from 2010 who may benefit from a HARP 3 refinance.

HARP Change 4 : Allow HARP Loan Sizes Up To $729,750

The fourth change that should be included in the HARP 3 refinance program is an allowance for “high-balance” loans in designed high-cost area.

First, some background.

Each year, the government releases its mortgage loan limits for Fannie Mae- and Freddie Mac-conforming loans. These figures that represent the maximum-sized loan that the government groups will agree to securitize. Loans which are in excess of these maximum loan limits are called “jumbo” loans.

Since 2006, the conforming loan limit for 1-unit homes has been $417,000. However, in 2009, as part of an economic stimulus plan, areas in which homes were deemed “expensive” were assigned a temporary conforming loan limit increase to $729,750 which was to last until September 30, 2011.

For two-plus years, therefore, home buyers in areas including Orange County, California; New York, New York; and Loudoun County, Virginia could finance up to $729,750 and still be within the maximum loan size limits for Fannie Mae and Freddie Mac.

Then, in October 2011, the loan limits dropped.

Homeowners in high-cost areas could no longer finance up to $729,750 with a conforming mortgage — the limit was dropped to $625,500 — leaving everyone in no-mans land whose conforming mortgage was started between 2009-2011 and for which the remaining balance exceeds $625,500.

So, to remedy this issue, again, HARP 3 can take a page from the FHA Streamline Refinance playbook. So long as the original loan size was within conforming loan limits at the date of original closing, and so long as the refinance doesn’t include “cash out”, the loan size could be approved as-is.

For More information and to see if you qualify call me 314 275-0418 or email me at

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