LeaderOne Financial Corporation, a Midwest mortgage banker, launched an aggressive outreach program in 25 states that is focused on helping the underserved real estate investors and landlords refinance their severely underwater mortgages through the Home Affordable Refinance Program HARP 2.0.
HARP 2.0 can have a positive impact for single family rental markets. Severely underwater landlords and real estate investors can refinance under the current HARP 2.0 guidelines.
LeaderOne, a direct Fannie Mae seller and servicer, expanded its HARP 2.0 lending guidelines to include refinancing options for real estate investors and income property owners who have higher loan-to-value ratios and may have previously been turned down by other lenders participating in the Home Affordable Refinance Program.
According to some reports, 6%-9% of all loans currently owned by Fannie Mae and Freddie Mac respectively are for non-owner occupied homes or those currently owned by landlords. From the housing peak, renter occupied housing in single family properties have increased from 30.8% to 33.5% from 2005 to 2010. This reflects the largest increase in non-owner occupied housing usage as families displaced from the housing crisis often seek similar property types as those they previously owned.
Households with three or more residents occupy more single family housing than households with one or two residents. Single family renters are also typically older than multi-family renters, which potentially represents a greater need for this type of housing.
Many cities now have housing markets that are over 40% tenant occupied, such as Wichita, KS, Boise City, ID and Cape Coral, FL.
The need for single family rental housing is evident, although refinancing help for landlords with above market interest rates from mortgages obtained years ago has not been forthcoming.
While the HARP 2.0 eligibility updates in October, 2011 made special arrangements for responsible homeowners who chose to rent their properties at a net-loss vs walking away and adding to the foreclosure crisis, few banks have jumped on board to help these struggling landlords.
Of the 380 properties that we have under management, about 25% of our landlords are stuck with 1-3 properties that they purchased before prices fell, said Tony Sena, Broker of Shelter Realty, a Las Vegas Property Management Company. Any monthly savings would have a positive impact for both the renters and property owners because it would create a much needed sense of stability and security, claims Sena.
Regardless of strength in local rent markets, if rental rates fail to meet or exceed the monthly carrying costs of underwater mortgages, the risk continues to exist that these properties will fall into foreclosure, putting both existing property owners and tenants at risk.
David Robnett, Vice President at LeaderOne, who is leading the companys real estate investor HARP outreach program, says that it has already been tested with great success and to the pleasant surprise of income property owners who were initially skeptical of being able to refinance an investment property that was underwater.
As a direct Fannie Mae Seller and Servicer, we have the ability to streamline the underwriting process in-house and maintain ownership of the loan when it is funded, Robnett explains. Since we have chosen to follow Fannie Maes HARP eligibility guidelines without adding any additional internal bank overlays or approval requirements, LeaderOne has the ability to help the maximum amount of borrowers allowed by this program.
The two major benefits provided by HARP 2.0 for investment property owners who have had challenges refinancing their underwater mortgages in the past include:
Unlimited loan-to-value, which means higher than 125% LTV is still eligible.
No bank overlays that restrict borrowers from owning or refinancing more than one property through HARP.
As the White House ramps up its #MyRefi Refinancing campaign, more landlords and real estate investors may have an opportunity to take advantage of lower rates.
For more information about the HARP 2.0 program for real estate investors, contact David Robnett at (314) 640-3300 or visit LeaderOne HARP Refinance online for a comprehensive list of frequently asked questions.
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