(harp) overview for housing counselors october 24, 2012€¦ · order to help reduce foreclosures...
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© 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
© Freddie Mac 2012 3
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.
© 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
© Freddie Mac 2012 7
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
© Freddie Mac 2012 9
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)
© Freddie Mac 2012 8
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
© Freddie Mac 2012 11
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
© Freddie Mac 2012 12
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
© Freddie Mac 2012 13
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.
The Freddie Mac Relief Refinance MortgageSM
© 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
© Freddie Mac 2012 15
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.
The Freddie Mac Relief Refinance MortgageSM
© Freddie Mac 2012 16
Freddie Mac Relief Refinance MortgageSM
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.
© Freddie Mac 2012 17
Freddie Mac Relief Refinance MortgageSM
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.
© Freddie Mac 2012 18
Freddie Mac Relief Refinance MortgageSM
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
© Freddie Mac 2012 19
Freddie Mac Relief Refinance MortgageSM
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
© Freddie Mac 2012 20
Questions?
Relief Refinance (HARP) for Housing Counselors
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