The Federal Housing Finance Agency recently announced changes to the Home Affordable Refinance Program (HARP) that will allow more borrowers to refinance and take advantage of historically low mortgage rates.
These changes to HARP (often referred to as HARP 2.0) are set to rollout this spring. Fannie Mae and Freddie Mac are currently updating their automated loan underwriting software. This is due to be completed in March 2012.
Some enhancements to HARP include:
- Removing the 125% loan-to-value (LTV) ceiling on fixed-rate mortgages backed by Fannie Mae and Freddie Mac when the automated underwriting software is updated eliminates the need for a new property appraisal. Depending on occupancy type, Prospect’s current LTV ceiling is between 105% and 125% with any HARP 2.0 LTV limitations forthcoming.
- Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages.
- Extending the end date for HARP until on or before December 31, 2013.
HARP borrowers must meet the following criteria:
- The mortgage must have been owned or guaranteed by Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it’s a Fannie Mae loan that was refinanced under HARP from March 2009 to May 2009.
- The current LTV ratio must be greater than 80%.
- Borrowers must be current on their mortgage payments with no late payment in the previous 12 months to 24 months, depending on the LTV.
Owner-occupied, secondary residences and investment properties may be considered for HARP refinancing. There are many HARP refinancing scenarios available.
from Prospect Mortgage Industry Insider