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FHFA Urges Borrowers to Consider HARP

Submitted on September 23, 2013

Calling it a "no-brainer," the Federal Housing Finance Agency (FHFA) has launched a campaign to encourage eligible borrowers to refinance their mortgages through the government's Home Affordable Refinance Program (HARP). The campaign is targeted at borrowers who are underwater on their mortgages or have little home equity, and who are current on their mortgage payments but have not yet refinanced through HARP. FHFA Logo

"To date, more than 2.8 million homeowners have refinanced through HARP," said Edward DeMarco, FHFA acting director. "With the launch of this campaign we look forward to reaching those homeowners who may not know about the program or understand the eligibility criteria to take advantage of today's low interest rates by refinancing through HARP." Though mortgage rates have risen in recent months, they still remain well below historic norms, and homebuyers who purchased their homes prior to the crash can still likely save money by refinancing if they have not yet done so.

Eligibility expanded The program has also loosened its eligibility requirements from when HARP was launched, making it easier for homeowners to refinance with someone other than their current mortgage company and lifting the former cap on loan-to-value limits so that borrowers can now refinance regardless of how far underwater they are on their mortgage.

The FHFA has launched a new web site at www.harp.gov to provide provide information on the program. In addition, it has hired the star of the HGTV series Power Broker, Mike Aubrey, as a spokesman for HARP. "HARP is an absolute no-brainer for eligible homeowners," Aubrey said. "This program allows underwater homeowners the option to refinance at a lower rate and in my book that is a great deal," "FHFA has already done the legwork to create an amazing deal," Aubrey continued. "It's as simple as finding out if you qualify, getting the refinance done and watching the savings add up."

To be eligible for a HARP refinance, homeowners must have a mortgage backed by either Fannie Mae or Freddie Mac; have a current loan-to-value ratio no greater than 80 percent (maximum of 20 percent equity) and be current on their mortgage payments, with no late payments in the last six months and no more than one in the past year.

FHFA Boosts Annual Guarantee Fees

Submitted on December 10, 2013

Annual fees for Fannie Mae and Freddie Mac home loans are going up next spring, although borrowers in most states will get a bit of a break with reductions in upfront fees. The Federal Housing and Finance Agency (FHFA) has announced that the ongoing guarantee fees for new Fannie Mae and Freddie Mac mortgages will be increased by 10 basis points early next year.

Meanwhile, the adverse market fee of 25 basis points, an upfront charge assessed since 2008, is being eliminated for all home loans except those in New York and three other states with unusually high foreclosure carrying costs. There will also be changes to risk-based guarantee fees charged up front that vary according to the borrower's credit profile.

All told, the FHFA expects guarantee fees to increase by an average of 11 basis points on loans secured by Fannie Mae or Freddie Mac, with an average increase of 14 points on 30-year mortgages and 4 points on 15-year home loans.

Shrinking F&F's role in mortgages The fee changes are part of a strategy to gradually reduce Fannie Mae and Freddie Mac's presence in the mortgage market in favor of a great role for private capital, according to Edward DeMarco, FHFA acting director. "The new pricing continues the gradual progression towards more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital," DeMarco said. "The price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating." The increase of 10 basis points in ongoing g-fees translates to an additional $200 a year on a $200,000 mortgage.

The elimination of the 25 basis point adverse market fee means a $500 reduction in one-time upfront fees charged on the same mortgage in most states. The adverse market fee will still be charged on new mortgages originated in New York, Florida, New Jersey and Connecticut, owing to high carrying costs on foreclosures in those states. That refers to the ongoing costs a lender must pay after repossessing a home in those states, such as insurance and property taxes, until it can dispose of the property. The new fees do not affect current mortgages. The changes are due to take effect in late winter or early spring, but no sooner than March 1, 2014.

Published on September 9, 2014