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Nation’s Big Four Banks Sign Up for HARP Expansion

The nation's four biggest mortgage lenders recently signed up for modifications to the Home Affordable Refinance Program (HARP), adding credibility to a mass refinance opportunity that met with cheers and criticism this week.

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The ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) ""announced"":http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf this week that it would lift the 125-percent loan-to-value ratio for mortgages, do away with risk-based fees for borrowers with short-term loans, and extend the lifetime of the program until 2013.

The announcement followed a bevy of rumors from news outlets about the modifications, dubbed HARP 2.0 by some, which the Obama administration billed as needed relief for underwater homeowners around the country and a stimulus for economic growth.

Earlier this week ""President Barack Obama"":http://www.whitehouse.gov/administration/president-obama characterized the refinance opportunity as one that will ""help a lot more homeowners refinance at lower rates, which means consumers save money, those families save money, it gets those families spending again.""

""Bank of America"":https://www.bankofamerica.com/, ""Citigroup"":http://www.citigroup.com/citi/homepage/, ""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm, and ""Wells Fargo"":https://www.wellsfargo.com/ each released separate statements in support of the widely anticipated initiative.

""We are pleased to work with FHFA to expand the HARP program because it should help thousands of Chase customers reduce their monthly mortgage payments,"" ""Frank Bisignano"":http://people.forbes.com/profile/frank-j-bisignano/46646, CEO for mortgage banking with JPMorgan Chase, said in a statement. ""We estimate it

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could lower a family's mortgage payments by an average of $2,500 a year, providing them more financial flexibility and improving the quality of their lives.""

Wells Fargo added in a statement that it ""welcomes the addition of the new HARP features to the existing offerings we provide our customers,"" falling in line with a commitment to make ""affordable and sustainable home loans to consumers.""

Bank of America issued a statement signaling earlier support from the bank for some 250,000 homeowners via HARP, describing the program as one that will continue to help ""homeowners who remain current on their mortgage with options to lower their monthly payment when... conventional funding options are limited.""

A spokesperson for Citigroup could not be immediately reached. ""_DS News_"":http://www.dsnews.com/articles/big-four-set-to-participate-in-harp-20-2011-10-27, the sister publication for _MReport_, independently confirmed that the lender had also agreed to participate in the program.

Sources speaking with _MReport_ earlier this week identified ""several tripwires"":https://themreport.com/articles/obama-refi-proposal-takes-form-in-harp-changes-2011-10-24 for the mass refinance opportunity, including out-of-pocket appraisal costs, still-tough underwriting standards, and the need for lenders to agree with homeowners who want to refinance their loans.

Reflecting a few of these concerns, some lenders issued certain eligibility requirements for homeowners interested in HARP even ahead of the formal guidelines.

For instance, homeowners doing business with Chase must have been current on their loans for the past six months, carry a LTV ratio no more than 125 percent of their mortgages, and live in quarters with fewer than five units.

Others adopted a wait-and-see approach, citing the need for more information from the FHFA.

""We're waiting for the specific guidelines from Fannie and Freddie, which we don't expect for a couple of weeks,"" ""Tom Goyda"":http://www.linkedin.com/pub/tom-goyda/10/931/989, a spokesperson for Wells Fargo, tells _MReport_. ""Once we have those, we'll need to make adjustments for the system. It will take some time after that to finalize and implement the changes.""

The FHFA plans to issue guidance related to the HARP changes in November.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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