Administration Enhances Foreclosure-Help Program

The Federal Housing Finance Agency (FHFA), the federal regulator with oversight responsibility for Fannie Mae and Freddie Mac, announced changes on Oct. 24, 2011, to the Home Affordable Refinance Program (HARP) to attract more underwater borrowers who could benefit from refinancing their home mortgages.

HARP was launched in 2009 to let troubled homeowners bypass a requirement that they have at least 20 percent equity in their home to be able to refinance their mortgages at lower rates. However, the program has been, some say, severely underutilized because many cannot qualify for help.

The program enhancements were developed at FHFA’s direction with input from lenders, mortgage insurers and other industry participants. Program changes include:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages, and lowering fees for other borrowers;
  • Removing the 125 percent loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties made by lenders on loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • Eliminating the need for a new property appraisal where there is a reliable automated valuation model estimate provided; and
  • Extending the end date for HARP until Dec. 31, 2013, for loans originally sold to Fannie and Freddie on or before May 31, 2009.

Fannie Mae and Freddie Mac plan to issue guidance with operational details about the HARP changes to mortgage lenders and servicers by Nov. 15, 2011. The FHFA also created a fact sheet and Q & A document to help answer questions about the modifications.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

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