Proposed Changes to the Home Affordable Refinance Program

Erik Hand, president of Windermere Mortgage Services, penned a blog post about the proposed Home Affordable Refinance Program (HARP) changes announced by Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac on October 24th.

Mr. Hand notes that the final document will not be released until Nov. 15th, 2011, but the following enhancements to HARP were discussed in the announcement on the 24th :

■ 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.

Be watching in November for the unveiling of the final HARP document, with details regarding all of the enhancements to the program. Do you think the proposed changes will have as positive outcome for current homeowners as it appears? Potentially, HARP will be more readily available to a larger group of homeowners seeking to refinance.