HARP 3 is the next release of HARP AKA Home Affordable Refinance Program.
It’s a program which has been talked about for months, but not yet made into law.
The passage of HARP 3 grows more likely with Mel Watt at the helm of the FHFA because, as a congressman, Watt pushed for homeowner assistance programs and increased access to credit. He is expected to continue that advocacy as head of Fannie Mae and Freddie Mac.
For homeowners, this could lead to a number of meaningful changes.
As one example, the new FHFA may reduce some of its guarantee fees — costs charged to lenders and passed on to consumers in order to insure mortgage bonds against loss.
“G-fees” have been incrementally increased since early-2011, and are scheduled to rise again in next spring.
Without FHFA G-fees, conforming mortgage rates would be lower by as much as 0.75 percentage points.
However, it’s the passage of a HARP 3-like program that has U.S. homeowners most excited about Mel Watt. A HARP revamp would likely expand the program to reach millions of additional households, and may even allow current HARP homeowners to refinance via the program a second (or third) time.
Some of the potential HARP 3 enhancements include :
Changing the program eligibility date: Currently, to be HARP-eligible, your loan must be originated no later than May 31, 2009. With HARP 3.0, eligibility dates may move into 2010 or 2011.
Allowing non-Fannie Mae and non-Freddie Mac mortgages: Currently, only loans backed the FHFA are HARP-eligible. With HARP 3.0, eligibility may be extended to include Alt-A, subprime, and bank-held loans, too.
Permit the refinance of an existing HARP loan: Currently, the HARP program is one-use only. With HARP 3.0, homeowners may be allowed to “Re-HARP” an existing HARP mortgage.
Make HARP a true “streamlined” refinance: Currently, HARP requires some paperwork. With HARP 3.0, the program could mirror the streamlined programs of the FHA, VA and USDA for faster, simpler approvals.
Each of these enhancements would jump-start the Home Affordable Refinance Program and, by extension, the U.S. economy. Refinances help boost consumer spending which helps to keep job growth strong.
With Watt confirmed at the FHFA, HARP 3 could pass at any time. Will you be ready for it?
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