Mortgage Daily

Published On: August 17, 2017

The government-funded refinance program for borrowers on government-sponsored enterprise mortgages with little equity has been extended despite fading activity.

Since the Home Affordable Refinance Program was launched in
April 2009, nearly 3.5 million Fannie Mae and Freddie Mac loans have been refinanced through the program.

But more recently, HARP production fell below 3,300 transactions in May —
 the fewest on record based on the oldest available data maintained by Mortgage Daily back to January 2011.

HARP was set to expire on Sept. 30, 2017, including whole loans purchased by June 30, 2018, or securitized in mortgage-backed securities pools with issue dates on or before June 1, 2018.

But an announcement Thursday from the Federal Housing Finance Agency indicated that the program will be extended until Dec. 31, 2018.

The extension for the program comes as FHFA establishes an eligibility date for new high-loan-to-value refinance programs announced in August 2016 to replace HARP.

According to today’s notice, the new streamlined refinance program will be available on loans originated on or after Oct. 1 2017.

“The eligibility date was necessary to preserve the objectives of the enterprises’ credit risk transfer program under which the enterprises have transferred a portion of risk on $1.6 trillion of unpaid principal balance with a combined risk in force of nearly $54.2 billion as of March 2017,” FHFA said. “The enterprises will modify the structure of future credit-risk-transfer transactions to accommodate the high-LTV streamlined refinance program by allowing the newly refinanced loans to return to the reference pools in place of loans that prepaid.  This will help preserve credit loss protection on the loans without unwinding the protection paid for through credit-risk-transfer transactions.”

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