Tuesday, October 25, 2011

A Ray of Sunshine for the Housing Market with New Changes to HARP

Good news is aglow in the mortgage industry since FHFA announced loosened guidelines to the Home Affordable Refinance Program or HARP yesterday. New guidance and details will be announced November 15, 2011, for the loan program which dawned March 4, 2009; at the time a refinance under HARP allowed up to 105% in loan to value. This isn't the first change we've seen however hopefully the most effective. Past changes have shed some light for underwater homeowners with an increase to permitted LTV's upwards of 125%, expanded upon loan origination dates, and extended deadlines of its availability to consumers. The program was conceived alongside HAMP which has aided borrowers in obtaining modifications but HARP did not require a financial hardship and/or mortgage payments to be past due. Performance of HARP has been lack-luster as participation is not mandatory and individual lender overlays have made it difficult to place some borrowers into a new loan. However the most recent changes have sparked lenders currently participating to accommodate the enhancements to the Fannie Mae and Freddie Mac backed loans. If we are lucky maybe even a few new lenders will lighten up and follow suit. I am hopeful for borrowers who have been left out in the dark until now to refinance into these historically low rates. Per the News Release...

The new program enhancements address several other key aspects of HARP including:
  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
  • Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac [the Enterprises]
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.
Borrower Eligibility  
  • The existing mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. 
  • Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:
  • The program will continue to be available for loans with LTVs above 80 percent.  
  • Borrowers must be current on their mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.  
  • Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances.
To apply for this or any other loan program contact me today.

Additional Resources:

Making Home Affordable

Disclaimer: Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  
If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

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