FHFA, Fannie Mae and Freddie Mac Announce HARP Changes to Reach More Borrowers

The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac, today announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their home mortgage.

HARP is unique in that it is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits. Borrowers must have mortgages currently owned or guaranteed by Fannie Mae or Freddie Mac.

The new program eliminates certain fees for borrowers; removes the current 125 percent Loan-to-Value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac; eliminates the need for a new property appraisal; and extends the end date for HARP to December 31, 2013.

An important element of these changes is the encouragement, through elimination of certain risk-based fees, for the borrowers to utilize HARP to refinance into shorter-term mortgages. Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today’s low interest rates by shrotening the term of theri mortgage.

Fannie Mae and Freddie Mac plan to issue guidance with operational details about the HARP chanes to mortgage lenders and servicers by November 15. Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers and other market participants modify their processes.