are you prepared to leverage harp ii? program review by: tj roberts sponsored by keypoint credit...
TRANSCRIPT
ARE YOU PREPARED TO LEVERAGE HARP II?
Program Review By: TJ Roberts
Sponsored by KeyPoint Credit Union and Silicon Valley CAMP
HARP II Timeline 10/25/2011-President Obama announces expansion of
HARP
11/15/2011-FNMA & FHLMC make announcements in writing
12/01/2011-Lenders make available some of the Harp Enhancements
1/3/2012-Clarification of guidelines and conditions generated by the AUS update.
03/18/2012-Automated underwriting engines will be able to support the increased loan to values and reduced documentation requirements
Reference Web links https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2
011/sel1112.pdf http://www.freddiemac.com/sell/factsheets/relief_refi_open_
access.html http://fanniemae.articulate-online.com/p/7778776992/Docu
mentViewRouter.ashx?Cust=77787&DocumentID=dbb2ed22-b596-47ff-81ed-90009a303cbb&Popped=True&InitialPage=player.html
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/c
urrent/rndodu83marupd.pdf
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 onlyPrimary residencePaid as agreed loans>80% loan to value
Refinance PlusRefinance Plus– Servicer to ServicerManual underwriting - Retail onlyNo delinquency in past 6-months, only one 30-
day delinquency in months 7-12Maximum 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 termSubject to full unconditional recourse
DU Refinance PlusDU Refi Plus– FNMA Service to FNMA ServiceAUS-approval only (Wholesale, Retail, &
Correspondent)No 60-day late past 12-months on any mortgageNo limit on payment increase with AUS approvalNo minimum credit with AUS approval All property and occupancy types eligibleNo maximum LTV or CLTV after 3/18/2012 for
FRM Max LTV is 105% for Adjustable or 40-year termNo recourse for lenders
Du Refinance Plus guidelines
Debt to income subject to AUS findingsAppraisal waiver will often be available
with $75.00 feeNo new project reviewIncome documentation:Minimum one paystub and verbal
verification of employmentCommission earnings require 1 year Fed
Tax return
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 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 6-months
■ 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
Original loan must be insured by the same mortgage insurance company.
Refi-to-Mod requests must be submitted to the current mortgage insurance holder by the current insured servicer of the original loan.
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).
Borrower cannot change from original loan. Changes due to marriage, divorce or death will be evaluated on an individual loan basis.
Coverage percentage: No change to the coverage from the original loan. Premium rate: No change to the premium rate from the original loan. Loan purpose: must be rate/term refinance can include closing costs. Existing secondary financing must be re-subordinated. Cash back: The borrower can receive up to $250 cash back at closing. Loan type: Fixed-rate or fully amortizing ARM, fixed for a min. of 5-years. Mortgage payment history must be current. Property type and occupancy: Type cannot change from the original loan.
BreakHow 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?
DU Refinance PlusStep 1: Find eligible loans
http://www.fanniemae.com/loanlookup/Step 2: Loan was before May 31, 2009Step 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 PlusNo loan to value restriction with AUS approval
after 3/18/2012Appraisal may be not be requiredIncome calculations may not be requiredAssets are not required unless needed to closeNo credit score requirement with AUS approvalAUS may provide you with: No Income No Equity No Assets
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: No maximum LTV ratio for FRM loan case files with terms up to 30-
years. 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 changesAll 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
FHLMC Open AccessStep 1: Find eligible loans
https://ww3.freddiemac.com/corporate/Step 2: Loan was before March 2009Step 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
No loan to value restriction with AUS approval after 3/18/2012
Appraised value determined by Loan ProspectorIncome for one borrower must be provided,
however calculations may not be requiredAssets are not required unless needed to close620 credit score is requiredAUS could provide you with:
No RatiosNo EquityNo 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?
FHLMC Open Access HVEEffective for mortgages with Freddie Mac settlement dates on or after March 15, 2012
Option One: Home Value Explorer® (HVE)
• 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.
• All the following requirements must be met:
• 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) .
• Forecast Standard Deviation no greater than 0.20 (corresponding to a Confidence Score of “H” (high) or “M” (medium)) .
• 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.
• As of the note date of the refinance mortgage, the HVE point value estimate may not be more than 120 days old .
• Note: AVMs other than HVE are not allowed.
• 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.
• Seller representation and warranties:
• 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
• Property value must be determined by obtaining an appraisal with an interior and exterior inspection meeting the requirements of Guide Chapter 44 .
• Seller representations and warranties for new appraisal:
• 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 RefinanceParticipation 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
Current mortgage balance: $450,000Current value: $380,000New loan @97.75% of Value: $371,450You will have 1% UFMIP and 1.15%
monthly mortgage insurance premiumCurrent loan @ 5.5% = PI $2,555New loan @ 3.75% = PI $1,732 +
$359.53Total payment of $2,092, savings of $462
Your next steps1) 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 borrowersAnd Make more money.
Refinances Easy as 1, 2, 3 ! !
