Fannie and Freddie Announce Expanded HARP Eligibility Dates

In a move some borrowers andrnoriginators might consider “too little, too late” both Fannie Mae and FreddiernMac announced today they are expanding the eligibility dates for the HomernAffordability Refinance Program (HARP).  While tremendously useful to the small amount of borrowers who benefit from the change, it’s not quite as magnanimous as it might sound.</p

Previously, loans had to have beenrndelivered to the agencies by 5/31/2009 to be eligible for HARP, which led tornwidespread confusion as lenders and borrowers had difficulty determining actualrnloan delivery dates without researching agency records.  In general, loansrnclosed by April 2009 were delivered to Fannie/Freddie by end of May, so werernpreviously eligible; those closing in May 2009, however, may have missed therninitial delivery date requirement.</p

With the changes announced today, the eligibility date will now be based on the NOTE date,  thus opening the window of HARP eligibility to all those borrowers who may have closed their loans before the May 31st cutoff, but whose loans weren’t acquired by the GSEs until after the cutoff.</p

Fannie Mae (per Selling GuidernSEL-2013-08) will update their Desktop Underwriter (DU) system on Nov 16 to reflectrnthe new eligibility dates;  Freddie Mac will update its Loan Prospector (LP) underwriting system to reflect the changes on Oct 27.  Lenders are required to have DU/LP approvalsrnfor HARP loans, so may be hesitant to start them until the underwritingrnguidelines are revised.</p

Best execution rates in May 2009rnrose from 4.69 to 4.88%, versus the current 4.25% rate for idealrnborrowers.  A borrower with a $200,000 loan could anticipate savingrnapproximately $80/mn, an amount that could increase if rates continue theirrndownward trend of the last month amid reduced expectations of Fed tapering.</p

The chief advantages of HARP loansrninclude their reduced equity requirements, a feature that enables many equityrnchallenged borrowers to reduce their rates without incurring additionalrnmortgage insurance costs, and, in some cases, relaxed income documentation asrnwell.</p

Home owners who closed theirrnexisting conforming loans in May 2009, and who were previously told they werernnot HARP eligible may want to contact a lender to discuss their HARPrneligibility.  Both lenders and borrowers might be excused if they wonderrnwhy Fannie and Freddie waited until the HARP program was 3 years old to makernthis logical change.

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