HARP 2.0

Fannie, Freddie & MBA Forecast Changes Oct 2011 to Nov 2011

The President announced a change to the HARP program (essentially loan modifications to borrowers with loans that are currently held by Fannie Mae and Freddie Mac that are performing but underwater).  The real key to these modifications is that now the lender is no longer responsible to purchase the loan back from the GSEs if something goes askew.  Economists have estimated that from 1 to 2 million homeowners would refinance under this new program that otherwise would not been able to lock in at almost record low interest rates under the prior version.

The tables below show the change in the forecasts from Oct 2011 to November 2011 in 1-4 family residential lending.  The focus here is on the impact on refinance volumes arising from HARP 2.0.  While the announcement for HARP 2.0 was October 24th with the guidelines and rules released by November 15th, It is not known at this time whether each of these entities factored in the potential impact on refis. (I have sent emails inquiring as such).

That said, it would appear that Freddie Mac has incorporated HARP 2.0 into their forecasts with an increased refi in 2012 of an additional $130 billion and $189 billion in 2013.

It will be interesting to see what the December forecasts from Fannie Mae and the MBA bring, if any.


  1. Anonymous

    Because of the HARP program I was recently contacted by my mortgage holder which is Chase to refinance my investment property. In the past when contacted about it they would not refinance it because it was a rental property. Under the new HARP program they are doing refis on investment properties. I am not upside down on it which may be a factor of why it qualified. The loan officer at Chase said they were extremely busy reminiscent of 2005.

    1. Ted C. Jones Post author

      Homeowners that can participate should do so with gusto.

      Thanks for the post.

  2. Kyler Cole

    One thing that has held me back from refinancing is the cost of PMI. I have a current PMI rate of $25/month, but when I checked on a refi, the PMI has gone up to $125. That would erase any value from a lower payment. I guess if you’re severly underwater, you don’t care about PMI any more. Which begs the question, if we have PMI to protect lenders from losing money on loans that go bad, why did we have this housing crisis on bad loans? Where did all the PMI go?

  3. Earl E. Green

    I just talked with Citimortgage about using Harp 2.0 on a refinance of my home and they said that the details have been pushed back to March 2012 or beyond and so they can’t do a refi under Harp. I was told that it may be better to wait as the closing costs should be lower than the current Good Faith Estimate I just received.

  4. Marc Shaw

    Ted- I also saw/read that Fannie Mae removed the “reasonable ability to repay” clause from the criteria for vetting borrowers for HARP refinance. It seems that many of the underwriting standards are being eased a great deal….

    Glad I found your blog. We actually met at a Stewart Title get together in Florida a few years ago.

  5. Jay Levitt

    I know that there has been a lot of confusion and discussion regarding the HARP Program, The 3 Step Refinance Program and then most currently the so called HARP 2.0 Program launching in a couple of days. I have originated about 900 HARP loans since 2010 and am very up to speed on the rules of these programs. If you are confused about questions such as:
    1-Am I eligible for the a version of the HARP Program?
    2-Why am I not eligible for the HARP Program?
    3-What is the maximum LTV/CLTV for the HARP Program?
    4-What type of property type changes are allowed with the HARP Program (second home, investor, etc)
    5-What are the FICO requirements of the HARP Program?
    6-Is is OK to have a bankruptcy, foreclosure, short sale and still participate in the HARP Program?
    7-Why are the rates sometimes better the higher the LTV with the HARP program?
    8-Why are some people eligible for the traditional HARP path and others are eligible for the traditional HARP path and the 3 Step or super streamline path?
    9-Can I participate twice in the HARP Program?
    10-Can I go through the HARP Program with a lender other than my existing lender?
    11-What is the difference e between HARP and the soon to be launched HARP 2.0 as they call it?
    The list of questions for the HARP Program, the so called HARP 2.0, and 3 Step program are wide. I know there is a lot of confusion based on the many conversations I have daily with people. This is an exciting time with the new program launching.

  6. rob

    I was told by Freddie Mac personel that by using Harp 2.0 my principal may be reduced if my home is underwater. They said to use a list of recommended lenders for my state however the recommended lenders say they cannot reduce the principle and it is up to my current bank. My bank CitiMortgage is not one of the recommended lenders for Arizona. Citi is telling me I need to cough up $480 for an appraisal and service fee because Freddie requires it however Freddie says they don’t require anything more than the avm? and Citi said nothing about lowering my principle loan amount. Are banks reducing principal now? And what gives with the appraisals? Or should I just wait a couple of months for things to shake out???

    1. Ted C. Jones Post author

      HARP was not designed to reduce principal unless the original lender determined to do so. Rather, it was to allow homeowners current on their underwater loans a chance to refinance at a reduced rate. It is the bank’s discretion in any loan if they decide to reduce the outstanding loan amount.

      Appraisals are always difficult in markets that are changing. When prices are rising, the appraiser has the dilemma of valuing a property at a price more than the older, but latest sales data. That said, we are seeing rising in many markets that were highly distressed. In Ft Myers-Cape Coral, for example, median home price reached $300,000 in 2006, and then feel to $90,000 in January 2010. In January 2012, however, the median price had risen to $120,000 – a great return for those having bought in January 2010, but no comfort for individuals that bought near or at the peak of the market. As prices rise, however, prospective homebuyers offer prices greater than recent sales, placing the appraiser in a quandary regarding whether they make an appraisal greater than any sale in the prior 12 months. Hence the dilemma for appraisers and issues on appraisals.


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