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Yesterday the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac announced several changes to the Home Affordable Refinance Program (HARP), the details of which can be found here: http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf.
While the specific changes will not be released until November 15, 2011, below are some of the enhancements that were included in yesterday's announcement:
- No Loan-to-Value Limit: Under the current program borrowers are limited to a maximum mortgage of 125% of the home's current value. By eliminating the loan-to-value limit the program will apply to more homeowners who are currently underwater on their mortgage.
- Lower Loan Level Price Adjustments ("LLPA's") and no LLPA's on loans with terms of 20 years or less; the end result will be a reduction in the costs of refinancing for most borrowers.
- Increase in the number of loans eligible for Property Inspection Waivers. Much like the LLPA issue, the end result will be a reduction in the cost of refinancing for more borrowers.
Given that the agencies will not release the final draft of the changes until the middle of November, right now we are in a "wait and see" mode as to the ultimate impact these changes will have. However, from an initial glance the changes coming are a positive step in making the HAMP program available to more homeowners.
By Erik Hand
Erik Hand is the president of Windermere Mortgage Services. An accomplished mortgage lending executive, Erik has over twenty years experience in the industry and is a Seattle Mortgage Bankers Association board member. When he’s not waxing poetic about mortgages and interest rates, Erik enjoys doing just about anything that will get him outdoors – rain or shine.
