Lending in the High Tech Age

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the latest SECONDARY MARKET Or ig i nat ion s e r v ic i ng Community Banks Call for Simplicity in Secondary Market Reform Smaller banks want to be included in the new policies, according to a recent white paper. FHFA will continue to educate borrowers who may not know about the benefits of HARP. "HARP is an absolute nobrainer for eligible homeowners. The program allows underwater homeowners the option to refinance at a lower rate, and in my book that's a great deal," Aubrey said. "I spend my time on TV and as a Realtor trying to get great deals for my clients. FHFA has already done the legwork to create an amazing deal. It's as simple as finding out if you qualify, getting the refinancing done, and watching the savings add up." In order to be eligible under HARP, the homeowner must meet the following criteria: The loan must be owned by Fannie Mae or Freddie Mac, the mortgage must have been sold to Fannie or Freddie on or before May 31, 2009, the current loan-tovalue ratio must be greater than 80 percent, and the borrower must be current on his or her mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months. The M Report se c on da r y m a r k e t T he Federal Housing Finance Agency (FHFA) announced a new program that will seek to educate homeowners on potential refinancing options under the Home Affordable Refinance Program (HARP). The program aims to inform underwater homeowners of expanded HARP eligibility requirements and encourage homeowners to discuss refinancing options with their lenders. "To date, more than 2.8 million homeowners have refinanced through HARP," said FHFA acting director Edward DeMarco. "With the launch of this campaign we look forward to reaching those homeowners who may not know about the program or understand the eligibility criteria to take advantage of today's low interest rates by refinancing through HARP." In order to publicize the program, FHFA has recruited HGTV personality Mike Aubrey to help promote HARP. W specialize in personalized and customized lending that megabanks are structurally incapable of providing." In addition to preserving the relative simplicity of the current loan selling process and avoiding industry consolidation, ICBA says lawmakers must make sure that any secondary mortgage market reform ensures "robust oversight by a strong and competent regulator" and maintains "an explicit government guarantee against catastrophic loss." Going forward, it will also be crucial to protect originators' rights to retain servicing after selling a loan, the group says. "In today's market, the large aggregators insist that lenders release servicing rights along with their loans . . . . While servicing is a low-margin business, it is a crucial aspect of the relationship-lending business model, giving community banks the opportunity to meet the additional banking needs of their customers," the white paper reads. With these concerns addressed, community banks are prepared to "adapt and thrive" in the private-market environment Congress is trying to restore, ICBA says. A na ly t ic s Agency Touts HARP Effectiveness ith Congress pondering (among other things) how best to reform the nation's housing finance system, Independent Community Bankers of America (ICBA) urges lawmakers not to count out smaller banks when drafting new policies. In a white paper released recently, ICBA warns policymakers to "be careful not to create a new [secondary market] system that destroys liquidity for all but the few largest players, limits access to the market or narrows options for smaller lenders, and imposes requirements that make it too costly for smaller lenders to operate—a common thread among the major proposals presented so far, the group says. "My community bank depends on easy access to the secondary market that doesn't require me to sell loans to a competitor," said Jack Hopkins, chairman of ICBA's Housing Policy Task Force and president and CEO of Sioux Fall's CorTrust Bank. "Consumers are better served by a diverse, competitive market with thousands of active mortgage lenders, including community banks, which | 59

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