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HARP Extended to September 2017; New HARP Program October 2017

The Federal Housing Finance Agency announced it extended the Home Affordable Refinance Program until Sept. 30, 2017 in order to create a smoother transition period for a new refi product it is planning to launch in October 2017.

According to the FHFA, Fannie Mae and Freddie Mac will implement a new refinance offering aimed at borrowers with high loan-to-value ratios.

While the complete requirements have yet to be published, Fannie Mae did release a fact sheet regarding its so-called “High Loan-to-Value Refinance Option.”

“The new refinance offering will provide much-needed liquidity for borrowers who are current on their mortgage but are unable to refinance through traditional programs because their LTV ratio exceeds the Enterprises’ maximum limits,” the release stated.

Currently, the FHFA estimates there are more than 300,000 U.S. homeowners that could still refinance through HARP.

Both the Home Affordable Modification Program and HARP were originally launched in 2009 to provide relief to borrowers by lowering their monthly payments and were set to expire on Dec. 31, 2013.

However, in June 2014, U.S. Treasury Secretary Jacob Lew announced several initiatives designed to spur the flailing housing market, including the extension of HAMP until Dec. 31, 2016.

Then, in May 2015, the FHFA announced that the deadline for HARP was extended to the end of 2016, matching the deadline of the HAMP.

In order to be eligible for the new High LTV program, the FHFA stated that borrowers must fit the following requirements:

  • Must not have missed any mortgage payments in the previous six months
  • Must not have missed more than one payment in the previous 12 months
  • Must have a source of income
  • Must receive a benefit from the refinance in one of the following ways
  • Reduced monthly principal and interest payment.
  • Lower interest rate.
  • Shorter amortization term.
  • More stable mortgage product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage.

The reported noted that full details will be available in coming months through the enterprises.

Unlike HARP, the FHFA stated that the new high LTV streamlined refinance offering is more targeted. Eligible borrowers are not subject to a minimum credit score, there is no maximum debt-to-income ratio or maximum LTV, and an appraisal often will not be required.

But unlike HARP, there are no eligibility cut-off dates connected with the new offering, and borrowers will be able to use it more than once to refinance their mortgage.

The FHFA noted that borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of the enterprises traditional refinance products.

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