Freddie Mac Unveils its HARP Replacement Loan

Last year Freddie Mac and Fannie Mae
announced that their implementation of the Home Affordable Refinance Program
(HARP) would continue through the end of 2018 and that both were developing a
new high loan-to-value (LTV) refinance offering to be available once HARP did
expire.  Freddie Mac has now provided
information on its new high LTV refinancing vehicle that will be effective for
mortgages with applications received on or after November 1, 2018.

The new product, branded as the Enhanced
Relief Refinance Mortgage
, will provide refinance opportunities to borrowers
with existing Freddie Mac mortgages but who cannot utilize the Freddie Mac “no
cash-out” refinance because the LTV of the new loan would exceed that program’s
maximum limit.  There is no maximum LTV
for a fixed rate Enhanced Relief Mortgage but there is a maximum LTV of 105
percent for an adjustable rate (ARM) version. 
Refinancing into an ARM will only be allowed if the existing mortgage is
also an ARM.

There are minimum LTV’s – 95.1 percent for
an owner-occupied property with one unit, 80.01 percent for two-to-four-unit
properties.  Investment properties are
eligible with lower corresponding minimums.

The mortgage being refinanced must be
owned or securitized by Freddie Mac and cannot be a Freddie Mac Relief
Refinance Mortgage. The mortgage to be refinanced must have a note date on or
after October 1, 2017 but must have 15 months of seasoning. 

To qualify for refinancing into an
Enhanced Relief Mortgage the borrower must receive one or more benefits that
include a reduction in the interest rate or of the principal and interest
payment of the first lien mortgage, replacing an ARM with a fixed-rate mortgage
(FRM) or a shorter amortization term. The mortgage being refinanced cannot have
been delinquent for 30 or more days in the most recent six-month period or
delinquent more than once in the previous 12 months.

The mortgage must be underwritten though
Loan Product Advisor or a manual underwriting program
.  The originator is not required to verify a
borrower’s income and assets nor is there a minimum Indicator Score requirement
except in some limited special circumstances such an increase in the monthly
payment of more than 20 percent or if the new mortgage is a Higher-Priced
Mortgage Loan.

To determine the property value the
originator may use Home Value Explorer or obtain a new appraisal report with an
interior and exterior inspection.

There is no limit on the number of times
an Enhanced Relief Mortgage can be used as long as all requirements are met.

Freddie Mac has also extended the expiration
date of its previous Relief Refinance Mortgage – Same Servicer and Relief
Refinance Mortgage – Open Access to December 31, 2018 for receipt of
applications and to September 30, 2019 for loan settlement.

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