Photo: The White House/Pete Souz
The Federal Housing Finance Agency just announced its changes to the Home Affordable Refinance Program (HARP), which serves as the backbone of President Barack Obama’s new housing plan.HARP programs have helped 894,000 borrowers through August — a far cry from the 3-4 million Obama promised in 2009. The changes are designed to allow more underwater homeowners with loans backed by the government to take advantage of lower interest rates.
This time FHFA is not providing a specific estimate for the number of homeowners it believes it can help under the revised program, but says “by the end of 2013 HARP refinances may roughly double or more from their current amount.”
The principal change is the elimination of the 125 per cent loan-to-value ceiling for refinances — allowing all homeowners to refinance if they meet the other eligibility criteria no matter how far their home value has fallen.
Here are the changes announced by FHFA:
- Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
- Removing the current 125 per cent loan-to-value 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;
- 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.
Here are the new HARP criteria:
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 month
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