Lending in the High Tech Age

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the latest s e c on da r y m a r k e t a na ly t ic s se r v ic i ng Or ig i nat ion SECONDARY MARKET HARP Questions Tackled by FHFA Zillow created an interactive forum for FHFA executive to answer questions about the agency's priorities. Z illow partnered with the Federal Housing Finance Agency (FHFA) to review eligibility requirements for the Home Affordable Refinance Program (HARP) and respond to borrowers confused about the program. Meg Burns, senior associate director for housing and regulatory policy for FHFA, joined Zillow 58 | The M Report for a Google+ Hangout session to field questions from underwater homeowners and explain HARP's finer points. Hosting the call was Erin Lantz, Zillow's director of mortgages. Responding to borrowers' worries about their financial situations, Burns reiterated that HARP has no minimum income or credit score requirements (though different lenders may have their own criteria). "It's a very streamlined product, which means lenders don't do traditional underwriting. They don't assess the borrowers' income amount nor look at the credit report," she said. "Most lenders really like that feature of the product because it makes it much easier for them to qualify a borrower for participation." Instead, borrowers are required to have a solid payment history, with no missed payments in the six months prior to refinancing and up to one missed payment in the 12 months prior. That history is used instead as a proxy for a borrower's ability to pay. "One of the great things about HARP is, if you continue to make payments on time, you ultimately will meet the payment history requirement," Burns remarked. She also stressed that the program can be used for second homes and for investment properties, though the fees may be slightly higher. Also discussed were several enhancements to the program (sometimes dubbed as "HARP 2.0") that went into effect in 2012 and expanded eligibility to more borrowers. Because those changes took effect well after HARP's inception, Burns urged borrowers who applied prior to March 2012 to try again. One of the biggest changes was the removal of the original HARP's 125 percent ceiling on loan-to-value (LTV) ratios. The elimination of that cap has been especially helpful for borrowers in states like Nevada, which has seen a significant boost in HARP refinances since eligibility opened up, Burns says. In the second quarter of 2013 alone, loans with LTVs of 125 percent or higher made up nearly 20 percent of all HARP activity, FHFA revealed in its latest quarterly report. Finally, answering a Realtor's question regarding dubious advice offered by some companies to struggling borrowers, Burns warned consumers to be careful of who they trust—especially if that person recommends deliberately missing payments. "Don't ever go delinquent on your mortgage if you want to qualify for a program," she said. "It's highly likely, for one thing, that you'll be rejected anyway, and it's really bad for your credit score." The question and answer session represented one way in which FHFA is working to spread knowledge of HARP and get more borrowers involved. In addition to loosening eligibility requirements last year, the agency has extended the program for an additional two years, bringing the expiration date to December 31, 2015. Through the end of this year, FHFA will be working with Zillow on a HARP-specific blog created to answer questions about the program's specifics and offer advice. More information can be found at

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