If the harp program is backed by the government why are the mortgage companies able to set their own rules and not approve you

Hi Shanae - thanks for the question. It's a matter of risk measurement. Most lenders layer additional requirements above agency guidelines to limit their risk on the loans they originate. - Sam at sam@silvercreekfinance.com

Good question! Us mortgage brokers and bankers are asking the same thing. Lenders add thier own requirements, called overlays, to further insure that the loan will not default. Big banks got "stuck" with bad loans in the very recent past and they do not want that to happen to them again. I am a full service mortgage broker in St. Charles. I have many lenders that are doing the new HARP 2.0 program and I just may be able to get you approved-even if someone else said that you cannot. Feel free to call me directly at 630-347-6321.Kris KrajeckiGreat MortgageNMLS# 225689

Great question...the bottom line it is a voluntary program and banks are adding as Sam mentioned their own layers of Risk. SO as of right now, this HARP 2.0 seems like more FLUFF than reality...Oh is there an election coming up?????hmmmmm I'm going to be optimistic and say its a software issue and Fannie/Freddie are going to work it out as it was intended, but I would go to Vegas and bet on it....GOOD LUCK to all you Mortgage Brokers and home owners getting thru the brain damage

Conventional loans are "Insured" meaning if certain things happen, such as a default/foreclosure, then the insurance pays "Part" of your loss.. The lender still has a partial loss, but it depends on what LTV the loan was originally, what the credit score was, and how old the loan was before it went into default. If you have ever dealt with an insurance company, you know they don't like to pay claims... and they do look for faults prior to paying a claim... this is why lenders have overlays... to furthur limit their risk... Keep in mind that you as the borrower, pay the monthly premium for the insurance. Also keep in mind that "Insured" loans are different than a "Guaranteed Loan" Such as USDA and VA.. These types of loans are guaranteed against default, but it's not insurance, because you dont have a premium... WilliamAcres.com

Good observation. Many banks have opted out of offering the HARP 2.0, eventhough it is backed through Fannie Mae and Freddie Mac. Fannie and Freddie are government sponsored enterprises, meaning they get govt assistance but they are for profit enterprises. My understanding is that if banks offer the HARP 2.0 they must also service the loan. Servicing means they manage the loan for the note holder. The loan servicer does have skin in the game if a particular loan defaults. Statistics show that loans with higher loan to values are more likely to default and that is what Harp 2.0 is all about unlimited LTV's. Therefore, banks who offer HARP 2.0 sometimes will have additional guidelines overlaying the Fannie/Freddie guidelines which ultimately offers additional protection to the bank/loan servicer. It's a little confusing but I hope that makes sense. Good luck!.