There were two pieces of the puzzle still left on HARP 2.0 after the announcement by Fannie of how all this was going to work: would the lenders go along, and what will the underwriting software actually issue approvals for.
Piece number one is in place, and it’s as good as we could have asked for. Wells Fargo, one of the last true behemoths left in the industry, issued its guidance for HARP 2.0 this week, and essentially, they will go along with the software decision. They cap the refinancing of non-owner properties at 105% LTV, but otherwise they will take the decision of the Desktop Underwriter.
This is exceedingly good news. It means that we will likely see HARP implemented as originally announced so many long winter months ago. For details on that, click here, but in a nutshell:
- no maximum LTV
- appraisal waivers in many cases
- reduced documentation for income and assets
- reduced price and rate penalties
The qualifying remains the same:
- loan must have been sold to Fannie or Freddie by May of 2009 (no refinances since)
- no mortgage lates in the last six months; no more than one in the past year
The other shoe will drop this weekend when we get the software out for a test drive. So stay tuned for that. Things look very good, though.
The one possible hiccup here is going to be loans that carry mortgage insurance. Those are specifically incorporated into the HARP program, but in all cases the mortgage insurer has to go along with the deal, so there’s an extra step involved. One insurer, United Guaranty, has already said they will NOT go along. The others have held fire, but it is anticipated that they’ll play ball. Much more on that as we go.