Posted May 25, 2012

HARP 2.0 : Approved By Fannie Mae, Denied By Freddie Mac?

Rob Chrisman Mortgage News & Quick Hits

Many in the industry continue to wonder why both Fannie Mae and Freddie Mac exist. The two agencies have had historically different underwriting standards, processes for securitizing loans, and so on.

This chasm has become evident again with respect to the re-release and re-launch of the Home Affordable Refinance Program (HARP), a program dubbed HARP 2.0. HARP is the government-backed mortgage program for underwater homeowners.

Click here to get today's HARP mortgage rates.

Under the original HARP, first launched in 2009, underwater homeowners were limited to the program's maximum allowable loan-to-value (LTV). This kept homeowners in places like California, Arizona and Michigan, where home values had dropped sharply, from even being able to qualify.

So, with the new HARP, the government sought to open the program to a wider range of people.

One big change was to allow unlimited LTV on all HARP mortgages financed via a fixed-rate mortgage. The reformatted HARP 2.0 opened HARP-eligibility to homeowners who are deeply underwater.

Unfortunately, the HARP refinance program's first 30 days have been marred by complaints. Homeowners and lenders assert that Freddie Mac's electronic approval system won't allow "unlimited LTV" and that Freddie Mac is turning away scores of homeowners who should otherwise be HARP-eligible.

In response to complaints, Freddie Mac has said that it will "fine-tune" of its underwriting process, and help more HARP applicants get approved.

Meanwhile, Fannie Mae is receiving negative feedback, too, just at a much slower rate than Freddie.

Click here to get today's HARP mortgage rates.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

3 Testimonials

Katrina B. Lab Technician

I look forward to reading The Mortgage Reports. Its information and updates helped me to buy my first home. Thank you!

Stefan J.

The Mortgage Reports is invaluable. It's our primary source for information on housing finance.

Ricardo P. Project Manager

The Mortgage Reports is awesome. The site is extremely helpful, keeps you up-to-date, and puts you ahead of the game. Add The Mortgage Reports to your reading list!

2014 Conforming & FHA Loan Limits

Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.