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ARE YOU PREPARED TO LEVERAGE HARP II?

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

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ARE YOU PREPARED TO LEVERAGE HARP II?

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  1. ARE YOU PREPARED TO LEVERAGE HARP II? Program Review By: TJ Roberts Sponsored by KeyPoint Credit Union and Silicon Valley CAMP

  2. 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

  3. Reference Web links • https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf • http://www.freddiemac.com/sell/factsheets/relief_refi_open_access.html • http://fanniemae.articulate-online.com/p/7778776992/DocumentViewRouter.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/current/rndodu83marupd.pdf

  4. 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

  5. Refinance Plus • Refinance Plus– Servicer to Servicer • Manual underwriting - Retail only • No delinquency in past 6-months, only one 30-day 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

  6. DU Refinance Plus • 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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.

  12. 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?

  13. DU Refinance Plus • 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

  14. 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

  15. 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)

  16. 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

  17. FHLMC Open Access • 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

  18. FHLMC Open Access highlights • 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

  19. 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?

  20. FHLMC Open Access HVE Effective 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.

  21. FHA Short Refinance Participation is voluntary and requires the consent of the lien holders: • The homeowner must be in a negative equity position • The homeowner must be current on the existing mortgage • The homeowner must occupy the subject property as a primary residence • The homeowner must qualify for the new loan under FHA underwriting requirements and possess a FICO based decision credit score >500 • The existing loan must not be FHA insured • The existing first lien holder must write off at least 10 % of the unpaid principal balance • The refinance FHA-insured first mortgage must have a loan-to-value ratios of no more than 97.75 % percent • Subordinate liens must be paid in full or subordinated to 115% max CLTV • Manual underwrite available, no cash-out, no payoff of debt allowed, and other requirements may apply

  22. Example of Short Refinance • 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

  23. 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 ! !

  24. Thank you for Attending TJ Roberts Nationstar Mortgage (408)802-8522 Tj.roberts@nationstarmail.com

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