HARP Extended, New High-LTV Program to Replace It

HARP launched in April 2009. Since its debut, there
have been 3,418,854 Fannie Mae and Freddie Mac loans that have been refinanced through HARP.

But interest in the program has recently been waning.
During June, there were 5,872 mortgages refinanced through HARP —
the slowest month on record.

But despite diminishing volume, the Federal Housing Finance Agency announced Thursday that
HARP’s sunset, which was set for Dec. 31, 2016, has been extended until Sept. 30, 2017.

Fannie issued a statement indicating that its
DU Refi Plus and Refi Plus are also being extended for loans with application dates on or before Sept. 30, 2017. This includes whole loans purchased no later than June 30, 2018, or in mortgage-backed securities pools with issue dates on or before June 1, 2018.

In HARP’s place will be a new
offering aimed at borrowers whose government-sponsored enterprise loans have a high loan-to-value ratio.

“This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac,” FHFA Director Melvin L. Watt said in today’s announcement.

Requirements for the new program, which goes live in October 2017, include no missed mortgage payments during the last six months, no more than one missed payment in the last 12 months and borrowers must have a source of income.

In addition, there must be a benefit from refinancing. This can include a reduced monthly payment, a lower interest rate or a shorter amortization term. It can also include moving from a less stable product like an adjustable-rate mortgage to a more stable product like a fixed-rate loan.

The LTV ratio on the refinanced loan must exceed the maximum ratio for a Fannie limited cashout refinance or a Freddie no-cashout refinance.

Fannie will only refinance loans it already backs, and the same goes for Freddie.
Twelve months seasoning is required in either case.

However, borrowers who are currently in a HARP loan cannot refinance through the new program unless they have refinanced out of the HARP mortgage with one of Fannie’s or Freddie’s traditional refinance products.

In addition, Fannie won’t refinance loans that were
previously delivered as a Refi Plus Desktop Underwriter or manual mortgage, while Freddie won’t refinance a loan previously delivered as a Relief Refinance Mortgage.

Freddie noted that mortgage insurance can be transferred to the new loan, and loans without mortgage insurance won’t require coverage for the refinance.

Freddie additionally indicated it will accept streamlined documentation for employment, income and assets. While manual underwriting might be required in some instances, Freddie will allow
Loan Product Advisor and manual underwriting options to the same or new servicers.

“The new high LTV streamlined refinance offering is more targeted than HARP but as with HARP, eligible borrowers are not subject to a minimum credit score, there is no maximum debt-to-income ratio or maximum LTV, and an appraisal often will not be required,” FHFA said. “However, unlike HARP, there are no eligibility cut-off dates connected with the new offering, and borrowers will be able to use it more than once to refinance their mortgage.”