Details on HARP2.0 Expected Tuesday

If they hold to their original schedule, the Federal HousingrnFinance Agency (FHFA) along with Freddie Mac and Fannie Mae, the two governmentrnsponsored enterprises (GSEs) which it holds in conservatorship, will bernreleasing guidance on the new version of HARP on Tuesday.  On October 24 President Obama announcedrnexpansion of HARP, the Home Affordable RefinancernProgram in hopes it might reach a larger audience. </p

HARP was designed to helprnborrowers who are current on their existing mortgage but underwater due to therndiminished value of their homes to finance into a loan with a lower interest rate.  Under HARP as it was originally designed,rnrefinancing was available to borrowers with GSE owned or guaranteed loans up torna 125 percent loan-to-value (LTV) ratio. rnUnder HARP 2.0 as they revised program is called, the upper limit on LTV isrnremoved (although this is only a consideration for borrowers who seek to refinance with the lender who currently holds their mortgage through retail channels.  Wholesale and correspondent channels never really had access to 125 LTV limits in the first place–a fact that’s not expected to change with HARP 2.0), risk-based fees paid by borrowers will be reduced or eliminated andrnlenders will be excused from some of the representations and warrantiesrntypically required with GSE loans.  Inrnaddition, where a suitable automatic valuation model (AVM) is available nornappraisal will be required and the program has been extended until December 31,rn2013. </p

At the time of the originalrnHARP2.0 announcement FHFA said that operational details about the HARP changesrnwould be issued to lenders and servicers by the GSEs by November 15 and,”Since industry participationrnin HARP is not mandatory, implementation schedules will vary as individualrnlenders, mortgage insurers and other market participants modify theirrnprocesses.”

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