Tuesday, November 15, 2011

HARP Updates

by Bill McBride on 11/15/2011 08:40:00 PM

Here are the new Home Affordable Refinance Program (HARP) guidelines from Fannie Mae: Selling Guide Announcement SEL-2011-12

As noted by the FHFA last month, the HARP deadline will be extended, there is no maximum LTV (except in certain cases), and most Reps and warrants have been eliminated.

On the timing, according to Fannie Mae: "The expansion of the LTV ratio limits is effective for Refi Plus mortgage loans with application dates on or after December 1, 2011." Desktop Underwriter® (DU) will be updated in March.

One of the keys is the elimination of most Reps and warrants, from Fannie Mae:

For DU Refi Plus:

• The lender is not responsible for any of the representations and warranties associated with the original loan.

• The lender is relieved of the standard underwriting representations and warranties (eligibility, credit history, liabilities, income and asset assessment) with respect to the new mortgage loan if the lender meets all of the following requirements:
- All data in the loan casefile is complete, accurate, and not fraudulent.
- The lender follows the instructions in the DU Underwriting Findings Report regarding income, employment, asset, and fieldwork documentation.
- The lender complies with all other requirements documented in the Selling Guide, A2-2.1-04, Limited Waiver of Contractual Warranties for Mortgages Submitted to DU.

For Refi Plus:
• With respect to the original loan, the lender must represent and warrant to the following:

- The loan was eligible for sale in accordance with Fannie Mae’s Charter at the time of delivery to Fannie Mae.

- The loan was originated in compliance with laws. See the A3-2-01, Compliance with Laws.

- The lender represents and warrants that the original loan being refinanced by a Refi Plus mortgage loan was not originated or sold pursuant to any scheme or pattern of fraud ...
If I'm reading this correctly, the elimination of Reps and warrants for the original loan applies to Desktop Underwriter® (DU) and that will not be updated until March.