GSEs To Waive The Appraisal And AVM requirement
Fannie Mae and Freddie Mac provided details yesterday (11/16/2011) on their expansion of the HARP program. The detailed bulletin establishes the guidelines for refinancing underwater borrowers with GSE loans. As part of the program, the Federal Housing Finance Agency is allowing the GSEs to waive the appraisal and AVM requirement.
The refi effort is being carried out under the HARP program or what Freddie calls its ‘Relief Refinance Program. A summary of the guidelines is as follows:
- The program is for borrowers whose mortgages are owned by Fannie Mae or Freddie Mac, and who got their loans before May 2009.
- HARP had been scheduled to expire at the end June 2012; HARP 2 extends the expiration to the end of 2013.
- There is no loan-to-value cap anymore for borrowers who now have fixed-rate mortgages.
- For borrowers with ARMs, the loan-to-value cap remains 105 percent.
- Borrowers can qualify for HARP 2 refis if they have paid on time for the last six months and have no more than one 30-day late payment in the last 12 months. Originally, HARP didn’t allow any delinquencies in the last 12 months.
- Fees have been reduced. Lenders are fond of adding fees to loans that have an added smidgen of risk. Fannie and Freddie call these fees “loan level price adjustments,” and the charges easily can climb to 2 percent of the loan amount on HARP refis. Under HARP 2, the fees are reduced to zero percent on loans for 20 years or fewer, and 0.75 percent for mortgages for more than 20 years and for ARMs.
The changes go into effect Dec. 1, 2011, to see the guideline details visit: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1122.pdf.