Mortgage Bankers and Brokers
Association of New Hampshire

NEWS: Federal Housing Finance Agency (FHFA) recently announced changes to the Home Affordable Refinance Program (HARP)

In an effort to attract more eligible borrowers who can benefit from refinancing their mortgage loan. FHFA’s announcement; Fannie Mae will be making changes to Refi Plus™ (manual underwriting) and DU Refi Plus™ and Freddie Mac will be making changes to Relief Refinance Mortgages.

Highlights:
Fannie Mae: Refi Plus (manual underwrite), effective with originations on December 1st:

There are no LTV limits for Fixed Rate Mortgages with a term up to 30 years for all occupancy and property types, including 15-year terms that were previously capped at a 105% LTV.
There is a LTV cap of 105% Fixed Rate Mortgages with a term greater than 30 years but not more than 40 years.
There is a LTV cap of 105% for ARM’s with an initial fixed rate period equal to or greater than 5 years and terms up to 40 years.
There are no CLTV or HCLTV limits.
There can be no 30-day late mortgage payment in the past 6 months and no more than one 30-day late mortgage payment in the past 12 months.
If payment (principal and interest) is increasing more than 20%, borrowers must a minimum credit score of 620; maximum DTI 45%, income and assets must be verified, and sufficient assets for closing must be adequately documented.
The wait periods for borrowers with previous bankruptcies and foreclosures have been removed. The re-established credit history requirement has been removed also. I am participating in a call on Thursday to learn what is actually required, if anything.
For both DU Plus and Refi Plus loans, there must be a benefit for the borrower, unless the borrower is refinancing into a more stable product. The benefit should be payment reduction.
For HARP loans (definition=GSE asset; owner occupied; greater than 80% LTV), loan level pricing adjustments (LLPA’s) have been reduced as follows: Mortgage terms less than or equal to 20 years=0 LLPA; Mortgage terms greater than 20 years=.75% LLPA.
Lenders can now solicit loans in other lenders’ servicing portfolio when borrowers have a LTV greater than 80% as long as the advertisement is consistent with the advertisement for loans in that lender’s existing servicing portfolio. Loans for borrowers in other servicers’ portfolio with LTV’s less than 80% cannot be solicited. Fannie Mae requires specific messaging when soliciting loans when a lender’s advertisement references them. See details in attached announcement.
Lenders must represent and warrant that all properties located in projects comply with Fannie Mae’s project standards.
Lenders must represent and warrant that the value in the original appraisal is the same if not getting an appraisal. If an appraisal is completed, lenders must represent and warrant that the appraisal meets Fannie Mae’s appraisal standards. We will continue to get appraisals for Refi Plus loans (and not exercise the PIW offering if it fires).

Fannie Mae: DU Refi Plus, effective March 2012:
1.   There are no LTV limits; however
2.   Loans scoring “Ineligible” due to LTV ratio being above 125% are not eligible for delivery to Fannie Mae.
3. When the PIW fires, lenders don’t have to represent and warrant anything relating to the appraisal (DU Refi Plus only). We will begin to exercise the waiver immediately.
4.    For all properties located in a project, we must represent and warrant that the property is not a condo, co-op hotel/motel.

Links to Fannie Mae and Freddie Mac announcements for your review and own assessment.
Fannie Mae Refi Plus and Refi Plus Enhancements: click here
Fannie Mae Refi Plus and Enhancements FAQ: click here
Freddie Mac Relief Refinance Mortgage Harp 2 timelines: click here
Freddie Mac Relief Refinance Mortgage HARP 2 Summary change: click here