Bank Don’t Follow HARP 2.0 Mortgage Guidelines


Posted on Aug 09, 2012

HARP is the acronym for the federal government's Home Affordable Refinance Program. In October 2011, the federal government updated the HARP program as "HARP 2.0." A key aspect is that HARP-homeowners can't be held captive by their current lender. The HARP rulebook states that HARP homeowners can apply for a mortgage with any bank that's a HARP program participant.

This becomes especially important in the content of the Fed's Senior Loan Officer Survey. Banks reported to what extent credit scores, loan-to-value and the ability of a HARP applicant to document income affected their willingness or ability to offer HARP mortgages. Here's what the survey found:

  • 35% of banks add investor overlays, creating new HARP qualification hurdles
  • 55% of banks turn down HARP loans because they're "too busy" to work them
  • 70% of banks don't want to refinance HARP loans that they don't currently service

Putting it all together, just because you've been turned down for HARP with one lender, it doesn't mean you'll be turned down for HARP by every lender. Lots of good HARP loans are getting turned away at the point of application for no good reason. If at first you don't succeed with HARP, apply, apply again.

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