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Harp Du Refi Plus Faqs

Harp Du Refi Plus Faqs

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Published by: crennydane on Apr 26, 2013
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Home Affordable Refinance (DU Refi Plus and Refi Plus) FAQs
April 22, 2013
 The Home Affordable Refinance Program (HARP) is designed to assist homeowners inrefinancing their mortgages – even if they owe more than the home’s current value. The primary expectation for Home Affordable Refinance is that refinancing will putresponsible borrowers in a better position by reducing their monthly principal andinterest payments, reducing their interest rate, reducing the amortization period, ormoving them from a more risky loan structure (such as an interest-only mortgage or ashort-term ARM) to a more stable product (such as a fixed-rate mortgage).
Table of Contents
©2013 Fannie Mae. Trademarks of Fannie Mae. Page 1 of 32 April 22, 2013.
 
 
Summary of Features
Fannie Mae’s Home Affordable Refinance initiative has three primary components:
1. Expand opportunities for Fannie Mae to Fannie Mae refinances through Refi Plus
, which includesDesktop Underwriter
®
(DU
®
) and manual underwriting eligibility.2. Allow unlimited LTV ratios on the new loans and additional underwriting flexibilities (loans with LTVsof >105.01% are limited to fully amortizing fixed-rate mortgages with a maximum term of 30 years).3. Provide a solution for borrowers with LTVs above 80% who currently may not be able to refinancebecause of mortgage insurance (MI) coverage requirements:
Original Loan LTV Ratio Existing MI Coverage MI Coverage for New Loan
80% or less None Not requiredNone (previously canceled orterminated per
requirements)Not requiredOver 80% Yes The level of coverage in force onthe existing loan or standardcoverage in accordance with the
Selling Guide
** Lenders are encouraged to use their best efforts to obtain MI coverage that provides the lowest-cost MIoption available to the borrower.
General
Q1. May borrowers obtain the refinance flexibilities only through their existing servicer or do theyhave the option to use another lender?
Fannie Mae has a refinancing option for each scenario depending on the borrower’s situationand preference. Manually underwritten Refi Plus loans are limited to originations by the currentservicer of the existing loan. DU Refi Plus may be originated by any lender selected by theborrower, including the existing servicer, because DU will automatically determine whetherFannie Mae is the investor on the existing loan, regardless of the lender entering the loancasefile.
Q2. Is there a way to determine whether Fannie Mae is the investor on an existing loan other thanhaving the borrower contact their servicer?
 Yes. Fannie Mae has an online tool, the Fannie Mae Loan Lookup, for borrowers to determinewhether Fannie Mae is the investor on their loan. The Fannie MaeLoan Lookupis available onKnowYourOptions.com by Fannie Mae. The tool indicates whether Fannie Mae is the investor on a property at a specific address, butdoes not determine refinance or loan modification eligibility for borrowers. Lenders and servicersmust refer to our published guidelines to determine a borrower’s eligibility for a particularrefinance opportunity or servicing solution.
©2013 Fannie Mae. Trademarks of Fannie Mae. Page 2 of 32 April 22, 2013
 
 Additionally, DU automatically determines if the borrower(s) and property address on a limitedcash-out refinance transaction are associated with an existing Fannie Mae loan, and applies theDU Refi Plus expanded eligibility guidelines, when applicable.Homeowners can also contact Fannie Mae by phone at 1-800-7FANNIE (1-800-732-6643)(8 a.m. – 8 p.m. ET) oremail toresource_center@fanniemae.com.
Q3. What is meant by movement to a more stable product”?
Generally, a more stable product would include movement from:
A mortgage loan with an interest-only feature to a fully amortizing mortgage product(provides amortization of principal and accumulation of equity in the property);
An adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM) (elimination of thepotential for payment shock);
An ARM to a new ARM with an initial fixed period of five years or more, and equal to orgreater than that of the existing mortgage (elimination of pending payment shock andmovement to the same or longer initial fixed-interest rate period); or
A 30-year FRM to a 15-, 20-, or 25-year FRM (accelerated amortization of principal andbuilding of equity).Movement to a more stable product would
not
include simply an extension of the mortgageterm, for example, a 30-year FRM to a 40-year FRM. But this type of transaction is permissibleif, and only if, the borrower realizes a reduction in the mortgage payment or a reduction in theinterest rate.
Q4. Is there a combined loan-to-value ratio (CLTV) or home equity CLTV (HCLTV) limit?
No, there is not a limit to CLTV or HCLTV for existing subordinate financing. All existingsubordinate financing must be resubordinated by the current lienholder without regard to anylimit on CLTV or HCLTV. Note, however, that the lender must calculate the CLTV for the newloan and provide it to Fannie Mae.
Refer to Q5 and the Refi Plus requirements of the
Selling Guide
for information related tothe simultaneous refinance of existing subordinate financing.
Refer to Q6 and the Refi Plus requirements of the
Selling Guide
for information related toRefi Plus (DU or manual) transactions with existing subordinate financing that is beingresubordinated with the transaction.
Q5. Will Fannie Mae allow existing subordinate financing to be refinanced?
 Yes, existing subordinate financing may be refinanced on Refi Plus transactions, provided thenew loan amount for the subordinate financing does not exceed the existing UPB. Under nocircumstances may any portion of the existing subordinate financing be included in the new firstloan amount.
NOTE:
 
This flexibility became available on DU Refi Plus loan casefiles with DU Version 9.0, released theweekend of October 20, 2012.
 
©2013 Fannie Mae. Trademarks of Fannie Mae. Page 3 of 32 April 22, 2013

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