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Administration Modifies Mortgage Refinance Program

Posted on 10/25/2011

The Federal Housing Finance Agency (FHFA) yesterday announced changes to the Home Affordable Refinance Program (HARP) in an effort to increase the program's reach to borrowers with loans backed by Fannie Mae and Freddie Mac.

The changes include removing the current 125 percent loan-to-value ceiling for fixed-rate mortgages backed by Fannie and Freddie, eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages, lowering fees for other borrowers, and extending the program until December 31, 2013, for loans sold to Freddie and Fannie on or before May 31, 2009.

Other changes will waive certain representations and warranties by lenders and eliminate the need for a new property appraisal if there is a reliable automated-valuation-model estimate.

To be eligible, borrowers must have made on-time payments for the last six months and not more than one late payment in the past year. Mortgages must be worth at least 80 percent of a property's value to be refinanced. The FHFA will issue formal operational details on the HARP changes on November 15.

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