Fannie and Freddie have both updated their automated underwriting systems (known as DU and LP) to allow for expanded loan to values and other improvements to their guidelines for these refinance programs.
HARP 2.0 does appear to have some continued issues. Banks are not all in agreement with the expanded guidelines that Fannie and Freddie have set out. Several are restricting what they will allow lenders to do to help the homeowners that have been waiting on this program. Some are willing to work with their current customers only while others are reportedly outsourcing their clients to internet lenders with less experienced mortgage originators.
We are constantly checking for new updates to the program and any new overlays from the investors that we work with. What we are hearing is that there will be continued changes coming, many may be here in the next week, some may be updated within a couple weeks.
The changes that we do know are:
- HARP is allowing for more waived appraisals on both Fannie and Freddie programs.
- Waived appraisals may be available to 1-unit primary residence, investment property or second homes. It's not available to 2-4 unit properties. NOTE: not every home owner will qualify to have their appraisal waived.
- Currently, the banks we work with are limiting the LTV to anywhere from 105-150% for the first mortgage. There are no LTV limits with second mortgages/HELOCs, however the second lien holder needs to agree to be subordinated or be paid off - it cannot be included in the new HARP refi.
- Some private mortgage insurance companies have agreed to reissue mortgage insurance to their current clients. That is still going to be the hardest part of the HARP 2 refinances.