(harp) overview for housing counselors october 24, 2012€¦ · order to help reduce foreclosures...

© Freddie Mac 2012 1

Freddie Mac Relief Refinance MortgageSM

(HARP) Overview for Housing Counselors

October 24, 2012

Robin Stout Migala, Freddie Mac Housing Outreach

Updated September 2012

© Freddie Mac 2012

Home Affordable

Refinance Program

(Freddie Mac Relief

Refinance Mortgage)

2

Implemented and further

strengthened changes to our

Freddie Mac Relief Refinance

Mortgage offering in an effort

to attract more eligible

borrowers who can benefit

from refinancing their home

mortgages


Home Affordable Refinance Program

General Eligibility for Relief Refinance Mortgages

Self-Service Lookup tool:

www.FreddieMac.com

• For Freddie Mac owned loans, the

purchase date will be displayed on the

results page

Freddie Mac initiatives for first lien, conventional mortgages

that are currently owned by Freddie Mac, in whole or in

part, or securitized by Freddie Mac

and

The mortgage being refinanced must have a

Freddie Mac Settlement Date

on or before May 31, 2009.

http://www.freddiemac.com/

© Freddie Mac 2012

Evaluation Hierarchy

4

HARP

Freddie Mac

Standard Modification

HAMP Modification

HAFA Short Sale

HAFA Deed-in-Lieu

Foreclosure

Freddie Mac

Standard Short Sale

Freddie Mac

Deed-in-Lieu

Reinstatement and Relief Options

Servicers must

evaluate borrowers in

accordance with the

evaluation hierarchy

outlined in our Guide.

Section 64.6(a) - Evaluation Hierarchy, Borrower Solicitation and Communication

© Freddie Mac 2012

Overview of the Relief Refinance Mortgage Enhancements

5

Same Servicer Open Access

Relief Refinance

Mortgage

Guide

Chapter

A24

Guide

Chapter

B24

Relief Refinance Mortgages are being extended to December 31, 2013.

To be eligible for refinancing under this offering, mortgages must have note dates on or before December 31, 2013

© Freddie Mac 2012

Home Affordable Refinance Program

Goals

Help homeowners who are timely on their mortgage payments, but

who are unable to refinance because they have little or no equity in

their homes

Enables homeowners to obtain a beneficial refinance, despite a

decrease in home values

Reduce monthly payments, where possible, for homeowners in

order to help reduce foreclosures and stabilize communities

Be an option for eligible homeowners to get into mortgages with

more stable, more affordable payments

Expiration date of the program extended

to December 31, 2013.

*The Freddie Mac Relief Refinance MortgageSM includes Freddie Mac’s

implementation of HARP solutions.

6


Two Refinance Options

Relief Refinance Mortgage – Same Servicer - Homeowner gets

refinancing from current participating servicer to whom the

homeowner already makes the mortgage payment and who already

has their files and documents.

» Fewer re-qualification steps of the homeowner is necessary unless the

principal and interest payment goes up more than 20%.

» No new appraisal is required in most cases.

Relief Refinance Mortgage - Open Access - Homeowner gets

refinancing from any participating Freddie Mac-approved lender who

is offering the Relief Refinance Mortgage.

» Re-qualification/re-underwriting is necessary.

» Valuation through HVE now permitted

The Freddie Mac Relief Refinance MortgageSM

© Freddie Mac 2012

Survey Question

Q: The HARP program was established for all first lien

mortgages regardless of investor. True or false?

» True – green check

» False – red X

8


Relief Refinance Mortgage – What’s Changed

Option Revised Requirements Effective

Same Servicer and Open Access Reduced income/asset

documentation and evaluation

requirements when borrower is

qualified for the new mortgage

Effective Now

Same Servicer Verify reserves equal to 12 monthly

PITI payments instead of verifying

source of income

Same Servicer When borrower is omitted from

note, allow remaining borrowers to

be re-qualified instead of providing

evidence of past 12 months’

payments

Open Access No verification of condo project

Freddie Mac eligibility (with certain

exceptions)


Relief Refinance Mortgage – What’s Changed

Option Revised Requirements Effective

Same Servicer and Open Access Aligned requirements for <80% LTV

with those >80% LTV. Simplifies

requirements

Application Received

Date on and after

November 19, 2012

Same Servicer and Open Access Maximum allowable closing

costs/prepaids lesser of 4% of UPB, or

$5,000. Cash back limited to $250

Same Servicer New mortgage does not have to

represent same occupancy as

mortgage being refinanced

Same Servicer No verification of funds unless

borrower is qualified for new mortgage

(P&I increases more than 20%)

Same Servicer Aligned requirements for LTV ratios

below, equal to, and above 80%. Seller

is not required to represent and

warrant that the mortgage being

refinanced met Freddie Mac eligibility

requirements, value, condition, and

marketability of the Mortgaged

Premises and certain fraud

requirements


General Eligibility

There is no maximum LTV/TLTV/HTLTV ratio for the existing

mortgage

If the new mortgage will be an ARM, the LTV is limited to

105%

No delinquencies in the most recent six months. No more

than one 30-day delinquency in the most recent 12 months on

the mortgage being refinanced for Same Servicer.

Manual underwriting only for Same Servicer

Loan Prospector only for Open Access

At least one borrower from the mortgage being refinanced

must be retained

Freddie Mac Relief Refinance Mortgage


General Eligibility (cont’d)

Credit score, documentation, and additional requirements

apply if borrower’s P&I increases more than 20 percent for

Same Servicer

1- to 4-unit primary residence, 1-unit second home, or a 1- to

4-unit investment property for all loans.

The mortgage being refinanced and the Relief Refinance

Mortgage – Same Servicer do not have to represent the same

occupancy

At least one borrower must have a verifiable source of income

or have reserves equal to at least 12 monthly payments of PITI

for Same Servicer.

Freddie Mac Relief Refinance Mortgage


Long-Term Stability and Affordability

Refinance must result in one of the following:

» Reduction in the interest rate of the first lien

mortgage.

» Replacement of an ARM, interest-only mortgage, or a

balloon/reset mortgage with a fixed-rate, fully

amortizing mortgage.

» Reduction in the amortization term (for example, a 40-

year FRM to a 30-year FRM) of the first lien

mortgage.

» Reduction in the borrower’s principal and interest

payment of the first lien mortgage.


© Freddie Mac 2012

Survey Question

Q: In order to be eligible for HARP, the borrower must not

have been delinquent on the existing mortgage in the most

recent six months. In addition, the borrower must not have

more than two 30-day delinquencies in the most recent 12

months. Is this correct?

» Yes – green check

» No – red X

14


Features of the New Mortgage

Mortgage insurance not required if existing mortgage

has no mortgage insurance and LTV ratio is >80% on

new mortgage.

Proceeds may be used to pay off the first mortgage, pay

related closing costs, financing costs, and

prepaids/escrows, and disburse cash out to the

borrower.




Lender Participation

Some lenders may choose not to offer these mortgages,

or they may choose not to implement all of the flexibility

available through the HARP component of the changes.

However, Relief Refinance Mortgages sold to Freddie

Mac at a minimum must meet our requirements.



Current Clients

The new Freddie Mac Relief Refinance Mortgage should

not impact your ongoing efforts with clients to work with

their lender on their existing Relief Refinance Mortgage.

These new requirements are effective with application

received dates on or after November 19, 2012.



Resources

Customer Service – 1-800-FREDDIE Option 2

Freddie Mac Loan Lookup –

https://ww3.freddiemac.com/corporate/

Relief Refinance (Same Servicer) –

http://www.freddiemac.com/sell/factsheets/relief_refi_same_servicer.html

Relief Refinance (Open Access) –

http://www.freddiemac.com/sell/factsheets/relief_refi_open_access.html

https://ww3.freddiemac.com/corporate/

http://www.freddiemac.com/sell/factsheets/relief_refi_same_servicer.html

http://www.freddiemac.com/sell/factsheets/relief_refi_open_access.html



Resources

Borrower HARP Eligibility Tool –

http://www.freddiemac.com/avoidforeclosure/harp_eligibility.html

HARP FAQs for Borrowers –

http://www.freddiemac.com/homeownership/educational/harp_faq.html

General HARP Information for Borrowers –

http://www.freddiemac.com/avoidforeclosure/harp.html

Participating Lenders (Open Access) –

http://www.freddiemac.com/avoidforeclosure/participating_lender_list.html

Relief Refinance (including HARP) Mortgages

http://www.freddiemac.com/sell/factsheets/relief_refi.html

http://www.freddiemac.com/avoidforeclosure/harp_eligibility.html

http://www.freddiemac.com/homeownership/educational/harp_faq.html

http://www.freddiemac.com/avoidforeclosure/harp.html

http://www.freddiemac.com/avoidforeclosure/participating_lender_list.html





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Relief Refinance (HARP) for Housing Counselors

(harp) overview for housing counselors october 24, 2012€¦ · order to help reduce foreclosures...

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