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The revamped HARP program was announced on Monday as expected. Some of the expected changes from the original HARP program were met, others were not.
The new key features include:
- No maximum Loan To Value. Theoretically, you could owe 400k on a property valued at 40k and you could be eligible.
- Elimination of Reps and Warranties which lowers risks for participating lenders
Features that don’t help:
- Lower adverse pricing adjustments for shorter term loans – incentive to refinance into a 15 year term
- Loan must date back to May 2009 or earlier, HARP remains a one-time use program
Some of the reasons why HARP failed to live up to expectations are being addressed here. LTV was a big one. Even though the program allowed LTV up to 125%, loans above 105% were scarcely provided by lenders. Quite often, it required the “same servicing lender” to originate the HARP loan, which was a problem when a majority of servicing lenders had quit originating loans entirely in the wake of the Mortgage Meltdown.
The Reps and Warranties issue should also help lenders jump in to participate in this program. Program guidelines can be laid out with the government’s design, but that doesn’t force (theoretically) free market participants (banks) to participate. They’ll do it if they believe they can make money with it.
Estimates are floating around that speculate anywhere from 1.9 Million to 3.9 Million homeowners could benefit from HARP II. It will help.
Lender program details will begin to emerge in mid-November. In the meantime, the majority of homeowners are unaware of whether they have Fannie Mae or Freddie Mac loans; do the research now.
Make sure you enter the information exactly as it reads on your mortgage statement. The forms are sensitive to “St.” vs “Street” etc. If your loan is backed by either one, make note of it. If you’d like me to contact you when more details emerge, fill in a few details in the form below.