Bankruptcy/Foreclosure Deal Breaker?
To put it simply, if you’ve gone through a bankruptcy or foreclosure you may qualify for HARP 2.0. However, additional stipulations can be implemented by both the banks and you guessed it, the government.
How recent is too recent for Bankruptcy?
According to Fannie Mae guidelines, there is no allotted waiting period to apply for HARP after a bankruptcy or foreclosure. As long as you are current on your mortgage payments for the past six months and have no delinquency exceeding 30 days for the past 12 months, you may qualify no matter how recent your bankruptcy or foreclosure was.
The Real Dirty Little Secret
Although, the above is a stated "fact", the real truth is when your information is ran through either Fannie or Freddie portals 99% of the time the results are not what you were hoping. What isn't clear is how long the findings will state what most are beginning to understand, as a government loop-hole. Yes, the government agencies will allow you to refinance under the HARP 2.0 program. No, you will not be able to refinance with any lender, bank, or any lending institution other than your current bank. Why, you ask? Mainly because the findings indicate your file will require a manual underwrite and well, no one is doing manual underwrites; except your current bank that holds your mortgage.
The dirty little secret, but not really is....... Your current mortgage provider has the power to do anything they want with your file, including; reducing your rate and/or term!
Striked through the HARP
If you are looking into the HARP and you have had a bankruptcy within the last four years, visit your current bank first. Probe for answers, asking them if they submitted your information accurately through the Fannie or Fredie portal and if so, what exactly did the findings state. Request a copy of the findings for you to review. If you get a copy and are having a hard time understanding, feel free to contact us. We will be more than happy to decipher what others are unable to translate for the benefit of understanding to read between the lines. Most importantly, make a point to contact a supervisor or upper-mangagement. If you are not satisfied with the results, don't stop there... You should never stop until you are satisfied, as it is your home we are talking about and we all know, the home is where the heart is!
If you have been considering a bankruptcy or foreclosure instead of your refinancing options it might seem beneficial because your overall debt is reduced instead of just your monthly payments. Despite what people tell you, a bankruptcy or foreclosure should be your last resort. Both can be financially crippling, so if you can qualify for HARP, make that your very first option.
H.A.R.P. Loan Program