Breaking Down HARPâ€™s New Changes
Yesterday, changes to the Home Affordable Refinance Program or HARP were announced in the hopes of attracting eligible borrowers towards refinancing. While specific guidelines won’t be released until November 15th, we’re here to break down what these changes are and how it affects your client’s loans.
• Certain risk-based fees will be eliminated for borrowers who refinance into shorter-term mortgages, lowering fees for your borrowers.
• The current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac will also be removed.
• Certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac will be waived.
• The need for a new property appraisal will be eliminated when there is a reliable AVM or automated valuation model estimated by the Enterprises.
• The end dates for HARP will be extended to December 31st, 2013 for loans that were originally sold to the Enterprises on or before May 31st, 2009.
These changes to HARP will allow borrowers that owe more on their house than the house is worth to reduce the balance of what they currently owe on their house quickly especially if they take advantage of today’s record low mortgage rates. Begin preparing your borrowers for these changes which will take place December 1st, 2011.