Home Affordable Refinance Program 2 (HARP2) and the new Iphone

Recently, Apple held an investor summit with the advance news they would be unveiling a new product.  At the presentation they unveiled the Iphone 4s.  Apple discussed all the new features of the phone, demonstrated the capabilities of the device, explained why you MUST have it, and told consumers how they could purchase one –with delivery in a week.  I walked by an Apple store on a Saturday morning one week later. There was a line 100 people deep running out of the store being helped by the Apple employees.  The customers could have bought the device at the store, online, or from their cell phone carrier.  The point is, the device was almost immediately ready for distribution and customers knew where to go to get one.

Now imagine if Apple held a much publicized  launch for a product.  Investors, reporters, technology fans, and consumers are anxiously awaiting the genius product to be unveiled.  Surely, they can get one to change their lives!  Apple makes the presentation and it blows everyone away.  People can not wait to get the new iLifeChanginingDevice! There is only one problem — it is not available for distribution.  There is a great idea… but they have not yet finished production or ironed out the distribution channels.  Everyone is sad…. they must be patient and wait.

This is where we are with HARP2, the refinance plan announced a month ago-  IT IS GREAT FOR THE PEOPLE WHO FIT IN THE BUCKET, but as an industry is it not ready to be deployed. 

FHFA (Federal Housing Finance Agency) released information on 10/24/11 (news release http://www.box.net/shared/aqe2auxm2p3tcp2oej45) with new initiatives extending program limitations for all HARP (Home Affordable Refinance Programs). This new initiative would allow lenders to provide  more flexibility than programs currently permit by providing some relief in certain areas over the current programs. At this time, most investors in the secondary mortgage markets, banks, lenders, etc. have not released information as to the extent of their participating in the New HARP 2 Initiative. Everyone will need some time to process the information, and work through their systems internally  prior to having the ability to originate loans under this program.

The news release says:

Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes.  In addition, some of the enhancements such as delivery of loans with LTV greater than 125 should be operational during the first quarter of 2012.

OK – So we are not quite ready to roll this out as an industry, but it will be in play at some point in the coming months.  There are the enhancements to the current program.

This program will continue to be available to borrowers with loans sold to the Enterprises (must have a current Fannie Mae or Freddie Mac loan) on or before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent. 

The new program enhancements address several other key aspects of HARP including:

 Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers

 Removing the current 125 percent LTV 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.  It is a hot topic with industry insiders trying to challenge this restriction.  This is the same group that was able to be helped under the old plan. 

So–there are some nice enhancements to the current program, especially if you home has drastically declined in value AND your original loan was 80% of the value at the time you got the mortgage.  Call me at 704-749-3691 or email at mattg@fairwaync.com if you are interested in this program.  I can do an analysis for you to see if you will fit into the program once it is ready to be put into action.