February 11, 2011 (Shirley Allen)
The Mortgage Bankers Association (MBA) has submitted a letter to Edward DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), calling for an extension to the Home Affordable Refinance Program (HARP) along with improvements to some of the guidelines contained within the program.
FHFA is the regulator for Fannie Mae and Freddie Mac, which administer HARP. The program was launched with the Home Affordable Modification Program (HAMP) in March 2009 to help underwater borrowers refinance into new or modified loans with lower payments and more favorable loan terms.
Complaints and recommendations from the MBA about HARP include:
– Constrictive nature of the loan-level price adjustments, or LLPAs, which are conducted on loans delivered to the government-sponsored enterprises and based up on features such as credit score, occupancy, number of units and others.
– Adjustments are capped at 2 percentage points. The MBA said these fees often push borrowers deeper underwater and recommended an evaluation of the fee structure to help borrowers with the highest LTVs.
– Currently mortgages with a loan-to-value ratio of more than 125% are not eligible. The MBA said this cap prevents borrowers from the hardest hit regions from entering the program.
– The MBA recommends that the program, currently slated to expire at the end of June, be extended to the end of December, 2012 to coincide with the expiration of the Home Affordable Modification Program (HAMP).
– Closer alignment between Freddie Mac and Fannie Mae’s separate HARP programs.
“FHFA should consider raising or removing the LTV cap on loans that the GSEs already own to allow borrowers who are in severe negative equity positions, yet are still meeting their mortgage obligations, to improve their financial position,” MBA CEO John Courson wrote in the letter.
“HARP is a vital component of a lender’s tool kit to help borrowers remain in their homes,” Courson added.
Tags: MBA, FHFA, HARP, HAMP, freddie mac, fannie mae, mortgage modification, refinance, borrowers, modified loans, underwater mortgages