HARP 1.0? HARP 2.2? HARP 3.0? HARP Seals? HARPsicord?

Written by Michael A. Foote, CMB on . Posted in Uncategorized

National Mortgage News is running an article today noting that Two Senators have reintroduced a bill aimed at expanding HARP. HARP is of course the governments refinance program aimed at helping underwater homeowners who have a loan currently owned by Fannie Mae or Freddie Mac AND was closing prior to June 2009. Expansion of HARP could allow any loan currently owned by Fannie Mae or Freddie Mac to be refinanced regardless of closing date. And remember just becuase you send your payment to Bank of America or ANY other institution, it doesn’t mean your loan isn’t potentially owned by Fannie or Freddie.

There still appears to be no relief or recent commentary on Harp 3.0 which is rumored to be a similar product wherein FHA would refinance underwater homeowners regardless of Fannie Mae or Freddie Mac ownership of the first mortgage. This would obviously help a ton of borrowers in Jumbo, Option ARMS, Interest Only and Portfolio loans.

The bill (S. 249) is also designed to create more competition between lenders and servicers in refinancing Fannie Mae and Freddie Mac loans. This bill will help millions of borrowers with GSE loans to refinance at lower rates, according to the sponsors Sens. Barbara Boxer, D-Calif., and Robert Menendez, D-N.J.

“It is a win-win-win,” Boxer said. “Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum.”

The Home Affordable Refinance Program was originally aimed at providing streamline refinancings of GSE loans with LTVs above 80% to 125%. The 125% cap was eliminated in early 2012. The Boxer-Menendez bill would expand HARP to include refinancings of all GSE loans, including loans with LTVs below 80%. “This bill prohibits the GSEs from charging upfront fees to refinance any loan they already guarantee, which is also in the best financial interests of the GSEs and taxpayers,” according to a summary of the bill.

To increase competition, the authors directed the GSEs to ensure lenders that refinance a GSE loan are subject to the same representations and warranties as the lender that services the loan. Currently, the new lender faces stricter rep-and-warranty liability than the lender that owns the servicing. The different standards pose a barrier to competition, “resulting in higher prices and less favorable terms for borrowers,” the summary says. The two senators introduced a similar HARP bill last year but it never reached the Senate floor for a vote.

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