Fannie, Freddie and FHFA Change HARP to Reach out to More Borrowers

Numerous Homeowners May be Eligible for Refinancing Using HARP

Freddie Mac, Fannie Mae and the Federal Housing Finance Agency, (Mortgage Giants) have created several changes in (HARP) the Home Affordable Refinance Program in an extended effort to appeal to more eligible home loan borrowers who may take advantage by refinancing their existing home loan. The program enrichment were developed at the FHFA direction while receiving input from mortgage insurers, lenders and other mortgage participants.

There are numerous homeowners who may be eligible for refinancing using HARP and these are just the borrowers the mortgage giants are trying to reach. Building upon the industryís HARP experience over the last couple of years, they have created several changes that is going to make the program more accessible to a greater array of borrowers with mortgages guaranteed or owned by the (Mortgage Giants). The goal was to create opportunities for refinancing by these borrowers, while diminishing risks for Fannie and Freddie and bringing more stability to the housing market.

Fannie and Freddie have assisted approx. 9 million families in refinancing into a less costly or more livable mortgage with approx. 10 percent of borrowers using HARP.

HARP is exceptional in that it's the only refinance plan which allows borrowers who have more owing than their equity to benefit from low rates of interest and other advantages of refinancing. This plan will remain accessible to home owners having loans purchased by the Mortgage Giants on or prior to May 31, 2009 having current loan-to-value (LTV) ratios in excess of 80 percent.

The revised program enhancements fixes a number of other key issues with HARP which includes:

    Removing a number of risk-based fees to borrowers who refinance using shorter-term loans and reducing fees for other mortgage borrowers such as;
    Eliminating the existing 125 percent LTV limit on fixed-rate loans backed by both Fannie and Freddie;
    Waiving specific warranties and representations that lenders must commit to when making loans guaranteed or owned by Fannie and Freddie
    Removing the necessity for a new appraisal on the property where a reliable automated valuation model (AVMI) estimate exists that's provided by the (Mortgage Giants); plus
    Extending the ending date for HARP through Dec. 31, 2013 on loans initially sold to the Mortgage Giants prior to May 31, 2009.
One important aspect of these modifications is their support, by eliminating specific risk-based fees, to mortgage borrowers by using HARP to refinance using shorter-term loans. Homeowners who owe more money on their home than it's worth will have the ability to reduce the loan balance much quicker if they use the low interest rates of today to their advantage by shortening their mortgage term.

The changes have drawn praise from numerous people who have been influential in assisting government policy and have been outspoken proponents for housing reforms and initiatives in Washington. They applaud the administration for moving through executive means labeling it "the right action at the right time."

These housing market issues need to be addressed as a way to further any recovery of the economy and it requires aggressive action which canít wait,. This sort of reform is critical in providing assistance to diligent homeowners, giving borrowers a opportunity to reduce their mortgage payments and at the same time save their homes. An increased home inventory in the real estate market right now is not something that can be afforded. Something must be done and these actions will definitely help.

This new plan to create guidance including details for operation about the HARP modifications, to mortgage servicers and lenders by November 15. Because industry involvement in HARP is voluntary, schedules for implementation will vary for individual mortgage insurers , lenders and other market participants.

New Article Oct 27, 2011

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