Feds ease rules to refinance ‘underwater’ borrowers

The Federal Housing Finance Agency removed several key barriers to the Home Affordable Refinance Program (HARP), allowing more underwater borrowers to move into lower-rate mortgages, Housing Wire reported.

HARP, which launched in March 2009, helped 838,000 Fannie Mae and Freddie Mac borrowers with loan-to-value ratios between 80 percent and 125 percent refinance.

In order to assist more of the estimated 11 million borrowers who owe more on their mortgage than their home is worth, the FHFA removed the 125 percent LTV ceiling on the program, Housing Wire reported.

The FHFA also eliminated certain risk-based fees borrowers had to pay and waived certain representation and warranty risk for lenders of the new, refinanced mortgage. An appraisal would also no longer be required if an automated valuation model estimate was already provided by the government-sponsored enterprise.

HARP was already extended earlier in the year, but the FHFA committed to pushing the program end date out even further to December 31, 2013.
The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months, the FHFA said.