https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf
http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1122.pdf

In short, here are the changes these guidelines describe:

- Starting December 1, 2011 authorized lenders were able to begin the loan application process for borrowers who have Fannie/Freddie mortgages with a current loan to value greater than 125%. HOWEVER those HARP 2.0 loans cannot be approved until March 2012 at the soonest because the Fannie/Freddie approval software will not be updated until then. So the soonest a HARP 2.0 loan with an LTV of more than 125% could actually close is probably April of 2012.

- For Freddie Mac loans, if the first mortgage is less than 80% of the value the home the first and second mortgage combined cannot be more than 105% of the current value of the home. (There will probably be price breaks for these loans though).

- There is apparently no change to the eligibility dates so people who got their current Fannie/Freddie loan after May of 2009 appear to not be eligible for HARP 2.0 still.

- There is no mention of changes to the mortgage insurance rules. The official guidelines of HARP 1.0 allowed for MI to transfer already but we do not know of any authorized lenders or MI companies that allowed that. We will have to wait and see if there is more incentive for lenders and MI companies to allow it with the new program.

The other questions yet to be answered over the coming months are:

1. How many authorized lenders will participate in the HARP 2.0 program? There are no requirements for lenders to participate.
2. What will the pricing be for these high LTV HARP 2.0 loan? (Probably significantly worse than loans with lower LTV’s)

So while these guidelines shed some light on the new program there are a lot of questions still to be answered. Stay tuned.

Contact us in the sidebar to learn more about which government-backed refinance programs might work for your family.

Lenders are no longer required to determine a borrower’s ability to repay a loan when underwriting mortgages for inclusion in Fannie Mae’s HARP 2.0 refinancing channel.

Barclays Capital made that conclusion in its securitized products research report Wednesday.

Barclays said Fannie Mae is adjusting its seller guidelines for HARP 2.0 after discovering the “borrower ability to pay clause” is preventing a large chunk of underwater mortgages from entering the program.

Under the changes, the ability-to-pay clause is no longer considered an underwriting requirement for Fannie’s HARP 2.0 program. Instead, Fannie Mae now stipulates that no debt-to-income calculation is required for these refinancings as long as the borrower’s payment does not increase by more than 20%, according to Barclays Capital.

While the HARP 2.0 program won’t be fully operational for a month or two please contact us in the sidebar now to see if you can qualify for it or another government-backed refinance program.

As we have discussed in the past, the HARP 2.0 program only applies to loans that are currently backed (invested in) by Fannie Mae or Freddie Mac. In addition the Fannie/Freddie loan must have been funded prior to May of 2009 to qualify for the HARP program. For the millions of loans that meet those requirements the HARP 2.0 programs is designed to allow homeowners to refinance to a lower rate without having to add private mortgage insurance (PMI) even when the loan is more that 80% of the current value of the home. The HARP 1.0 program allowed borrowers to refinance up to 125% of the current value of the home but the HARP 2.0 will do away with that 125% limit. In addition the HARP 2.0 will reportedly be available to borrowers who are currently paying PMI on their Fannie/Freddie loan.

Fannie and Freddie have announced that they will not have their underwriting software updated until March of 2012. As a result the bulk of the HARP 2.0 loans will not be able to be closed until then. What remains to be seen is if some lenders will be willing to manually underwrite HARP 2.0 loans before then. We will monitor the situation and report on any announcements regarding that here.

In the meantime we recommend you fill in the contact form in the sidebar to see which government-backed refinance programs apply to your situation.

Please note that the federal government does not lend directly to consumers with this program. Rather the HARP program is outsourced through authorized lenders so the actual implementation of the new program requires those lenders to be ready to originate and fund loans under the new program. Fully implementing new programs like this generally takes weeks or even months.

Contact us in the sidebar to learn if you are a candidate for the HARP 2.0 program or other government-backed refinance programs and to be connected with an authorized lender.

1. There is no longer a 125% loan to value limit to the program. Going forward HARP loans can theoretically work for any loan backed by Fannie Mae or Freddie Mac regardless of how underwater the home is.

2. A full appraisal will not be required in all cases. Reports are that in some cases an automatic valuation system may be used.

3. Mortgage insurance providers have reportedly agreed to automatically transfer mortgage insurance coverage to the new loan. If this is true it will be a huge change because previously borrowers with mortgage insurance were not able to participate in the HARP program.

Unfortunately, the cut off dates for eligibility were not changed so any loans taken out after May of 2009 are still not eligible for the program.

The FHFA said the operational details for the program will be available by November 15th 2011. That probably means that the new program won’t be up and running with most authorized lenders until December. The question yet to be answered is how many authorized lenders will choose to participate in the new version of the program in the months to come. But assuming several authorized lenders do participate there is no denying that removing the 125% limit and the allowing borrowers with mortgage insurance to participate will open the program to vastly more borrowers.

Contact us in the sidebar to learn more about the HARP program and other government-backed refinance programs that are available.

A group of 13 senators sent a letter to regulators Tuesday, pressing for a plan to boost mortgage refinancing for more homeowners as soon as possible. Such a plan is being widely-discussed admittedly, and now the lawmakers are ready to see some action.

“Time is of the essence and we urge you to act quickly and aggressively to ensure that responsible homeowners receive the full benefit of these lower rates,” the senators said in the letter to Treasury Secretary Timothy Geithner, Department of Housing and Urban Development Secretary Shaun Donovan, Federal Housing Finance Agency Acting Director Edward DeMarco, and National Economic Council Director Gene Sperling.

While a letter from senators might be more show than substance, it does help show there is wide support for upgrades and changes to the HARP programs and other government-backed refinance programs. With any luck regulators will announce the changes and upgrades soon. As soon as changes are announced we will report on them here.

In the meantime, contact us in the sidebar to learn more about the government back refinance programs that are already available while rates are still hovering near all time lows.

“My sense is, based on what I’ve seen…it’s going to be meaningful enough to make a difference,” Mr. Geithner said at a Senate Banking Committee hearing…

“They are looking at a range of things and you’ll see more details in a couple of weeks,” Mr. Geithner said.

Stay tuned. It sounds like the changes will be announced in the next few weeks.

In the meantime, rates continue to test new lows this month. Contact us in the sidebar to learn more about the refinance programs that could help you.

In the meantime, contact us in the sidebar to learn more about the government-backed refinance programs you might already qualify for.

President Barack Obama said on Thursday he is seeking to broaden U.S. homeowners’ access to mortgage refinancing in a plan to help the ailing housing market and put money back in the pockets of borrowers needing help locking into record low rates.

“We’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” …

The White House officials said the U.S. Treasury was having talks with both Fannie Mae and Freddie Mac and their regulator — the Federal Housing Finance Agency — on ways to broaden refinancings. The aim is to is to “remove the barriers that exist in the current refinancing program.” …

The refinancing initiative under consideration by the Obama administration would need final approval from the acting head of the Federal Housing Finance Agency, Edward DeMarco. Those close to DeMarco say he is acting as an independent regulator with the goal of conserving the assets at Fannie and Freddie, a position he has staunchly defended before lawmakers since the two firms were taken over by the government three years ago.

The encouraging news is that the Obama Administration does not appear to need the approval of the Republican-led congress to make access to the HARP program easier. Rather the administration mostly needs to persuade the independent head of the FHFA Edward Demarco that their plan is sound.

We’ll keep you posted on the progress of this new initiative. In the meantime, contact us in the sidebar to see which government-backed refinance programs you already qualify for.

The HARP program is designed to help people with conventional mortgages backed by Fannie Mae or Freddie Mac refinance to lower interest rates even if the value of their homes have dropped. With a HARP loan a conventional mortgage can be refinanced at up to 125% of the current value of the home. This is obviously useful to people who are underwater on their mortgages, but the program is also very useful to people who owe 80-100% of the current value of their home because with the HARP program borrowers can refinance to a lower Fannie/Freddie loan without having to add mortgage insurance.

Contact us in the sidebar to learn which programs will best assist your family.