The World According to HARP 2

W e s t e r n B a n c o r p I n c . S a n J o s e , C a l i f o r n i a | 4 0 8 . 6 0 0 . 0 7 0 0 | w w w . w e s t e r n b a n c o r p . c o m | h a r p @ w e s t e r n b a n c o r p . c o m

T h e w o r l d a c c o r d i n g t o H A R P ( 2 . 0 )

1

http://www.westernbancorp.com



2

HARP 2.0 IS ENHANCED TO CREATE MORE REFINANCING OPPORTUNITIES

FOR HOMEOWNERS. CAN HARP 2.0 HELP YOU?HARP 2.0 is hot.

The Home Affordable Refinance Program, or HARP, was created to address the problem facedby millions of homeowners who have been unable to take advantage of historically lowmortgage refinance rates because their property values have fallen. The program startedslowly in March 2009, and was criticized by some for being overly complex and not helpingenough homeowners.

But while HARP originally received mixed reviews, the revamped "HARP 2.0" that launched inMarch 2012 has the makings of a huge hit. At least 750,000 homeowners have applied to theprogram as of May 2012, according to Housing and Urban Development Secretary ShaunDonovan. Those homeowners whose applications are accepted can expect to save an averageof $2,500 per year on mortgage payments.

This new and improved version of the original HARP is now hitting its stride with severalimportant enhancements that make the program more accessible to a larger number ofhomeowners. Now, as the program becomes more popular and applications rise, even morelenders are gearing up to participate.

HARP CAN BE

QUICKER

•The HARPrefinancing

process can befaster than that

of a conventionalloan. There is lesspaperwork andthe approval

process isrelatively quick.

At WesternBancorp, we have

been able toprocess and fundmost HARP loans

in 20-30 days.




3

WHAT CAN HARP 2.0 DO FOR HOMEOWNERS?HARP 2.0 is unique in that it is "the only refinance program that enables eligible borrowerswith little to no equity in their homes to take advantage of low interest rates and otherrefinancing benefits," according to Fannie Mae.

The expectation for HARP 2.0 refinancing is to put responsible borrowers who have stayedcurrent on their mortgages in a better position by:

REDUCING THEIR MONTHLY PRINCIPAL AND INTEREST PAYMENTS

REDUCING THEIR INTEREST RATES

REDUCING THE AMORTIZATION PERIOD (THE TERM OF THE LOAN)

MOVING FROM RISKIER LOANS SUCH AS AN INTEREST-ONLY MORTGAGE OR A SHORT-TERM

ADJUSTABLE RATE LOANS TO MORE STABLE OFFERINGS SUCH AS A FIXED-RATE MORTGAGES

Ideally, HARP 2.0 will allow these responsible borrowers to refinance their current mortgagesfor more affordable payments, save money and prevent foreclosures. And although theoriginal HARP - call it HARP 1.0 for simplicity - resulted in financing for fewer than 1 millionhomeowners, HARP 2.0 has some important enhancements that borrowers should knowabout. If you think you might benefit from this popular refinancing program, check out theHARP 2.0 Q&As on the following pages or call Western Bancorp for fast answers!

Western Bancorphelps California

homeownersrefinance




4

1 - HARP 2.0: REDESIGNED TO HELP MORE HOMEOWNERS

HARP 1 helped only small portion of the millions of underwater homeowners were able toactually qualify and refinance their homes at more favorable interest rates. In November 2011,Fannie Mae and Freddie Mac released updated HARP 2.0. guidelines.

HARP 2.0 looks more promising than the previous version for several reasons. Many of theobstacles for refinancing have been removed in this new program and exceptions are nowbeing made for homeowners who have:

LOWER INCOME FEWER ASSETS

LOWER CREDIT SCORES LOWER APPRAISAL VALUES

?

ÜÜ

ÜÜ

•

Even"underwater"homeowners

who owe muchmore than thecurrent valueof their homesmay benefit

fromHARP 2.0

•




5

WHO CAN QUALIFY FOR HARP 2.0 REFINANCING?

Here are a few of the criteria to qualify for a HARP 2.0 loan. Note that participating lenderguidelines for approval will vary. If you have applied for a HARP loan before and been turneddown, go ahead and re-apply again. To qualify for a HARP 2.0 loan, you should:

?

Be current on monthlymortgage payments

Current is defined as having no late payments of 30 days or more in the past 12 months.Borrowers who have missed a payment during the past six months may have to wait untilthey meet these requirements before they apply.

Have a mortgage that is ownedor guaranteed by Fannie Maeor Freddie Mac.

How can you tell?

Check this Website to see if your mortgage is owned by Fannie Maehttp://www.fanniemae.com/loanlookup/

Check this Website to see if your mortgage is owned by Freddie Mac:https://ww3.freddiemac.com/corporate/

Have a mortgage that waspurchased by Fannie orFreddie before May 31, 2009.

The date that a loan is closed is typically not the same as when it was purchased, by Fannieor Freddie. Check with your lender to find out.

Not have previouslyrefinanced with HARP

If you have previously refinanced with HARP 1.0, you cannot use HARP 2.0.

Not have an FHA loanThe Federal housing administration has a separate program called an FHA StreamlineRefinance. Ginnie Mae is associated with FHA loans and does not participate in the HARPprogram.

Not have a USDA loan USDA does allow for the refinance of current USDA Guaranteed or USDA Direct Mortgages

Not have a VA loanThe Interest Rate Reduction Refinancing Loan (IRRRL) offers current VA mortgage holdersan excellent opportunity to take advantage of low interest rates

Applied for a HARPloan before and been

turned down? Wecan help you find

out if you're eligiblefor HARP 2.0 orother programs.




6

WHAT'S THE LOAN-TO-VALUE RATIO? WHY IS IT IMPORTANT?

The Loan-To-Value (LTV) Ratio is one criteria used by lenders to assess risk when decidingwhether to approve a mortgage. The LTV is calculated by dividing the amount of themortgage by the current appraised property value. For example, if you were trying topurchase a 400,000 property with $100,000 down, your LTV is calculated like this:

$300,000 MORTGAGE LOAN AMOUNT / $400,000 APPRAISED PROPERTY VALUE = 75% LTV

In this example, the homeowner owes more than the property is worth. The property isworth $400,000 and the mortgage balance is $420,000.

$420,000 MORTGAGE LOAN AMOUNT / $400,000 APPRAISED PROPERTY VALUE = 105% LTV

A higher LTV typically means more risk, a higher cost loan, and possibly the requirement topurchase mortgage insurance if the LTV is higher than 80 percent.

?

Ü

Ü

Don't do the math?We do.

Contact us for ano-pressure refinanceconsultation today!




7

IS THERE A LOAN-TO-VALUE CAP WITH

HARP 2.0?

For fixed-rate mortgages, the 125% LTV caphas been eliminated. At Western Bancorp, wehave seen loans as high as 285% LTV getapproved for "compensating factors."Compensating factors include savings orother assets borrowers possess thatdemonstrate financial stability to lenders.

?WHO ARE FANNIE AND FREDDIE, AND WHY DO THEY

MATTER TO MY MORTGAGE?

It's tough to overstate the importance of The Federal NationalMortgage Association (Fannie Mae) and Freddie Mac. Theirmission as government-sponsored enterprises (GSEs) is to"support liquidity and stability" in the secondary mortgagemarket where mortgage-related securities are bought and sold.

Fannie Mae and Freddie Mac purchase or guarantee 40% to60% of all mortgages originated in the United States annually,according to Investopedia. As the nation's largest mortgagebuyers, Fannie Mae and Freddie Mac play a key role by makingmortgages more affordable to millions of American homebuyers.

Fannie Mae, along with Freddie Mac, was taken over by thefederal government in 2008 after suffering huge financial losses.The two mortgage giants have been heavily criticized for failingto disclose the risk of purchasing many sub-par loans duringthe housing boom, but their role in the U.S. real estate financeremains essential.

?

S�� "��"�� ?

•All lenders are not created equal, and not all

lenders offer the same HARP 2.0 programs. Ifyou have been turned down for a HARP loan,turn to Western Bancorp for another chance.

We're experienced in the application process andhave access to the most flexible Fannie and

Freddie guidelines.




8

WILL I HAVE TO PAY

MORTGAGE INSURANCE?

It depends. A primary goal of HARP 2.0 is toprovide a solution for borrowers who were unableto refinance because of mortgage insurancecoverage requirements. The HARP 2.0 guidelines onmortgage insurance are:

IF THE BORROWER’S CURRENT LOAN REQUIRES

MORTGAGE INSURANCE, THE HARP LOAN WILL ALSO.THE INSURANCE RATE SHOULD REMAIN THE SAME AS

THE CURRENT LOAN, BUT YOUR PAYMENT WILL

CHANGE BASED ON THE AMOUNT BORROWED. ASK

YOUR MORTGAGE BANKER FOR MORE INFORMATION.

BORROWERS ARE NOT REQUIRED TO ADD MORTGAGE

INSURANCE IF THEIR CURRENT LOAN DID NOT

REQUIRE IT.

Note: If you're applying for HARP 2.0 refinancingand currently pay mortgage insurance, be sure tolet your lender know that's the case to avoid issueswith the loan application process.

WILL I NEED A NEW APPRAISAL?

With HARP 2.0, the appraisal requirement iswaived under certain circumstances. If a suitablecomputer-generated value estimate called anautomated valuation model (AVM) is available inthe area, the appraisal fee is typically waived.Some property types that may qualify to have theappraisal waived under HARP 2.0 guidelinesinclude:

SINGLE UNIT PROPERTIES

CONDOS / TOWNHOMES

PRIMARY RESIDENCES, SECOND HOMES AND

INVESTMENT PROPERTIES

HOMES WITH LTV VALUES GREATER THAN 80%

?

?

Ü

Ü




9

IS HARP 2.0 RESTRICTED TO

OWNER-OCCUPIED HOUSING?

HARP loans were originallyrestricted to owner-occupants, butHARP 2.0 has been expanded toinclude refinancing on secondhomes and investment properties insome cases. Ask your MortgageBanker for details.

CAN HARP 2.0 BE USED TO

REFINANCE CONDOMINIUMS?

HARP originally included somerestrictions on condominiumcomplexes in which more than20% of owners were behind ontheir homeowners' fees. Theserestrictions have been relaxed toenable more condo owners toqualify for refinancing. Speak toyour lender today!

What are my refinanceoptions if I don't qualify

HARP loans are only one of severaloptions available to borrowers. Ifyou don’t qualify for HARP 2.0,check with a Mortgage Bankerabout other refinancing options thatcould be right for you.

WHAT ARE MY REFINANCE OPTIONS IF IDON'T QUALIFY FOR HARP 2.0??

R�� ?•

HARP 2.0 restrictions have been relaxed to enable more condo owners to qualify for refinancing. Speak to your lender today!




10

NEXT STEPS FOR REFINANCING SUCCESS

For homeowners who don't qualify for HARP 2.0, there is already talk about a possible HARP3.0 that would expand the program to include more homeowners and promote competitionamong lenders. But with lawmakers offering competing versions of the next generation ofHARP, it's difficult to know what the specifics might be.

The other consideration? In May 2012, mortgage rates continue to hover around historicallylow levels, but for how long? It's anyone's guess. Rates could rise because of changes inmonetary policy, as the broader economy gains strength, or even conditions in overseas creditmarkets.

How refinancing fits in with your own situation depends on your own goals, includingfactors like how long you plan to live in your current home. If you're not sure, you cancontact mortgage banker to review the costs and potential savings of refinancing.

Questions on refinancingyour California home?

Contact Western Bancorptoday for fast answers or ano-pressure consultation!

Call 408.600.0700or email

[email protected]



The World According to HARP 2

Documents

Transcript of The World According to HARP 2