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