ARE YOU PREPARED TO
LEVERAGE HARP II?
Program Review
By: TJ Roberts
Sponsored by KeyPoint Credit Union and Silicon Valley CAMP
HARP II Timeline
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10/25/2011-President Obama announces expansion of HARP
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11/15/2011-FNMA & FHLMC make announcements in
writing
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12/01/2011-Lenders make available some of the Harp
Enhancements
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1/3/2012-Clarification of guidelines and conditions generated
by the AUS update.
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03/18/2012-Automated underwriting engines will be able to
support the increased loan to values and reduced
documentation requirements
Reference Web links
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https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf
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http://www.freddiemac.com/sell/factsheets/relief_refi_open_access.html
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http://fanniemae.articulateonline.com/p/7778776992/DocumentViewRouter.ashx?Cust=77787&Docu
mentID=dbb2ed22-b596-47ff-81ed90009a303cbb&Popped=True&InitialPage=player.html
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https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf
https://www.efanniemae.com/sf/mha/mharefi/pdf/refiplusmatrix.pdf
http://www.mgic.com/origination/refi_to_mod.html
http://rmic.com/productsandservices/recovery/Pages/default.aspx
https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu
83marupd.pdf
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HARP (what is it?)
Home Affordable Refinance Program
 A program designed to refinance
homeowners to help them lower their
rate or term
 Owner occupied properties only
 Primary residence
 Paid as agreed loans
 >80% loan to value
Refinance Plus
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Refinance Plus– Servicer to Servicer
Manual underwriting - Retail only
No delinquency in past 6-months, only one 30day delinquency in months 7-12
Maximum 45% DTI if payment increases by more
than 20%
Minimum credit score requirements if payment
increases by more than 20%
No maximum loan to value after 3/18/2012 on
FRM
Max. LTV is 105% on Adjustable or 40-year term
Subject to full unconditional recourse
DU Refinance Plus
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DU Refi Plus– FNMA Service to FNMA Service
AUS-approval only (Wholesale, Retail, &
Correspondent)
No 60-day late past 12-months on any mortgage
No limit on payment increase with AUS approval
No minimum credit with AUS approval
All property and occupancy types eligible
No maximum LTV or CLTV after 3/18/2012 for
FRM
Max LTV is 105% for Adjustable or 40-year term
No recourse for lenders
Du Refinance Plus guidelines
Debt to income subject to AUS findings
 Appraisal waiver will often be available with
$75.00 fee
 No new project review
Income documentation:
 Minimum one paystub and verbal verification
of employment
 Commission earnings require 1 year Fed Tax
return
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OPEN Access (FHLMC)
Mortgage requirements
The mortgage being refinanced must:
 Be a first-lien, conventional mortgage currently owned or
securitized by Freddie Mac
 Have a Freddie Mac settlement date on or before May 31,
2009
 If the mortgage being refinanced has mortgage insurance or
mortgage pool insurance, it is eligible for refinancing. (See
Guide Chapter B24.3 (h) for requirements)
 If the mortgage being refinanced has recourse,
indemnification, or other credit enhancements defined in
Guide Chapter B24, it is ineligible to be refinanced as a Relief
Refinance Mortgage – Open Access
Open Access continued
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FHLMC Open Access
LP AUS-approval only (Wholesale, Retail, & Correspondent)
One 30-day late in the last 12-months /none in the last 6-months
Requalification required if debt to income ratios exceeds 45%
No minimum credit score of 620 with AUS approval
All property and occupancy types eligible
No maximum LTV or CLTV after 3/18/2012 for FRM or 105% for
Adjustable or 40-Year term
LP (AUS) findings with reduced documentation requirements
No appraisal requirements -HVE will determine value and LTV
Lower costs associated on HARP eligible loans
FHLMC Open Access guidelines
■ Requires a minimum indicator score of 620
■ Adding a borrower benefit provision allowing the Relief Refinance
Mortgage to be originated for the purpose of reducing the monthly P&I
payment
■ Requires that at least one borrower have a source of income and that
the seller verify the income source
■ Requiring verification of borrower funds when needed for closing
■ Value on the property to be determined by FHLMC HVE program
■ Permitting one 30-day delinquency within the previous 12-months of
the mortgage being refinanced, provided no delinquency during last 6months
■ Revising requirements for mortgages with P&I payment increases
greater than 20%
■ Allowing for a more flexible use of refinance proceeds
Mortgage Insurance for HARP loans
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Original loan must be insured by the same mortgage insurance company.
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Refi-to-Mod requests must be submitted to the current mortgage insurance holder by the
current insured servicer of the original loan.
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Borrower benefit: The borrower’s sustainable ability to repay the loan must be improved
through a lower payment or a more stable loan. Investor cannot change (e.g., if Fannie
Mae, must stay with Fannie Mae).
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Borrower cannot change from original loan. Changes due to marriage, divorce or death
will be evaluated on an individual loan basis.
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Coverage percentage: No change to the coverage from the original loan.
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Premium rate: No change to the premium rate from the original loan.
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Loan purpose: must be rate/term refinance can include closing costs.
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Existing secondary financing must be re-subordinated.
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Cash back: The borrower can receive up to $250 cash back at closing.
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Loan type: Fixed-rate or fully amortizing ARM, fixed for a min. of 5-years.
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Mortgage payment history must be current.
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Property type and occupancy: Type cannot change from the original loan.
Break
How can this program help me generate
more business?
 Who does HARP, DU Refi Plus, and Open
Access apply to?
 What new benefits are there for these
programs?
 What if they do not qualify for HARP, Du
Refi Plus, or Open access?
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DU Refinance Plus
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Step 1: Find eligible loans
http://www.fanniemae.com/loanlookup/
Step 2: Loan was before May 31, 2009
Step 3: Has the borrower modified or had
too many late payments to meet
requirement?
Step 4: Run Desktop Originator for eligibility
and requirements for qualification
Step 5: Know the requirements of the
lenders you will be submitting the loan to
for closing
Highlights of DU Refi Plus
No loan to value restriction with AUS approval
after 3/18/2012
 Appraisal may be not be required
 Income calculations may not be required
 Assets are not required unless needed to close
 No credit score requirement with AUS approval
 AUS may provide you with:
No Income
No Equity
No Assets
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FNMA preview of AUS changes
DU Refi Plus enhancements
As specified in Announcement SEL-2011-12, the HARP program has been extended.
The following enhancements will be made in DU to expand eligibility:
Updated credit risk assessment
With this release, modifications are being made to the credit risk assessment in order
to give more borrowers the ability to refinance using DU Refi Plus. As a result, the
number of DU Refi Plus loan case files that receive an EA-III rec. will be expanded.
Maximum LTV ratios and eligible products
Maximum LTV ratio for DU Refi Plus loan case files is being removed for DU Refi Plus
fixed-rate mortgages with terms up to 30-years, and there will continue to be no limits
on the CLTV or HCLTV ratios. The maximum LTV ratio limits for all occupancy and
property types are:
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No maximum LTV ratio for FRM loan case files with terms up to 30-years.
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A maximum LTV ratio of 105% for FRM loan case files with terms greater than
30- years up to 40-years, and for adjustable rate mortgage loan case files with
initial fixed periods greater than or equal to five years and terms up to 40-years (as
permitted by the ARM plan)
Pricing changes
All agency LLPA have been effectively
eliminated for HARP (LTV>80%, owner
occupied) loans with terms of 20-years
and less
 The cap will be reduced to 0.75% for all
HARP loans (LTV>80%, owner occupied)
with terms greater than 20-years
 Current LLPA and caps for all Non-HARP
DU Refi Plus and Refi Plus remain in
effect
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FHLMC Open Access
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Step 1: Find eligible loans
https://ww3.freddiemac.com/corporate/
Step 2: Loan was before March 2009
Step 3: Has the borrower modified or had
too many late payments to meet
requirement?
Step 4: Run Loan Prospector for eligibility
and requirements for qualification
Step 5: Know the requirements of the
lenders you will be submitting the loan to
for closing
FHLMC Open Access highlights
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No loan to value restriction with AUS approval
after 3/18/2012
Appraised value determined by Loan Prospector
Income for one borrower must be provided,
however calculations may not be required
Assets are not required unless needed to close
620 credit score is required
AUS could provide you with:
No Ratios
No Equity
No Assets
What to do if your borrowers
can’t qualify for HARP II?
Is your borrower’s loan not eligible for
HARP?
 Is there anything you can do to help them
to refinance?
 What is the FHA Short Refinance
Program?
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FHLMC Open Access HVE
Effective for mortgages with Freddie Mac settlement dates on or after March 15, 2012
Option One: Home Value Explorer® (HVE)
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Seller may determine the value of the mortgaged premises using a point value estimate from HVE. Sellers using HVE data agree
to the terms and conditions of Guide Exhibit 32, terms relating to use of data generated by Home Value Explorer.
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All the following requirements must be met:
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1- to 2-unit attached or detached dwelling, or a unit in a Condominium Project or PUD (no Manufactured homes, dwelling on a
leasehold estate, or if a seller is permitted to deliver Cooperative Share Mortgages under its purchase documents, a
Cooperative Unit) .
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Forecast Standard Deviation no greater than 0.20 (corresponding to a Confidence Score of “H” (high) or “M” (medium)) .
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Written copy of the HVE point value estimate in the mortgage file. If estimates for a group of mortgages are in one report, the
mortgage file must contain a screen print of the applicable HVE point value estimate, Forecast Standard Deviation, Confidence
Score, and date of the estimate.
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As of the note date of the refinance mortgage, the HVE point value estimate may not be more than 120 days old .
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Note: AVMs other than HVE are not allowed.
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Note: For Texas Equity Section 50(a)(6) Mortgages, the seller must obtain an appraisal that meets Freddie Mac requirements
and complies with Section 50(a)(6)(Q)(ix) and Section 50(h) of Article XVI of the Texas Constitution.
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Seller representation and warranties:
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Relieved of value, interior and exterior condition and marketability of the mortgaged premises representations and warranties
for the refinance mortgage. Seller may not use the HVE value option if aware of any circumstances or conditions adversely
affecting the value, condition or marketability of the mortgaged premises as of the delivery date. All information provided for
the purpose of obtaining the HVE point value estimate, including the address of the mortgaged premises, is true, complete and
accurate .
Option Two: Obtain a new appraisal
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Property value must be determined by obtaining an appraisal with an interior and exterior inspection meeting the requirements of Guide
Chapter 44 .
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Seller representations and warranties for new appraisal:
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Value, as of the delivery date of the new refinance mortgage, is at least equal to the value of the appraisal with the most recent effective
date before the delivery date of the refinance mortgage. Interior and exterior condition and marketability of the mortgaged premises.
FHA Short Refinance
Participation is voluntary and requires the consent of the lien holders:
1.
The homeowner must be in a negative equity position
2.
The homeowner must be current on the existing mortgage
3.
The homeowner must occupy the subject property as a primary residence
4.
The homeowner must qualify for the new loan under FHA underwriting
requirements and possess a FICO based decision credit score >500
5.
The existing loan must not be FHA insured
6.
The existing first lien holder must write off at least 10 % of the unpaid principal
balance
7.
The refinance FHA-insured first mortgage must have a loan-to-value ratios of no
more than 97.75 % percent
8.
Subordinate liens must be paid in full or subordinated to 115% max CLTV
9.
Manual underwrite available, no cash-out, no payoff of debt allowed, and other
requirements may apply
Example of Short Refinance
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Current mortgage balance:
$450,000
Current value:
$380,000
New loan @97.75% of Value: $371,450
You will have 1% UFMIP and 1.15% monthly
mortgage insurance premium
Current loan @ 5.5% = PI $2,555
New loan
@ 3.75% = PI $1,732 + $359.53
Total payment of $2,092, savings of $462
Your next steps
1) Find out your lenders guidelines on the HARP,
DU Refi Plus, FHLMC Open Access and FHA
Short Refinance
2) Find qualified borrowers for these programs
3) Close more loans, help more borrowers
And Make more money.
Refinances Easy as 1, 2, 3 ! !
Thank you for Attending
TJ Roberts
Nationstar Mortgage
(408)802-8522
Tj.roberts@nationstarmail.com