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No Appraisal Required Under New HARP

Today the Federal Housing Finance Agency (FHFA) announced changes to the Home Affordable Refinance Program (HARP) to “attract more eligible borrowers who can benefit from refinancing their home mortgage.” The announcement was made in conjunction with the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac. HARP will now allow borrowers to refinance even if they are underwater. According to the Wall Street Journal, only 894,000 borrowers have used HARP, of which 70,000 were underwater.

FHFA announced several enhancements to HARP, including eliminating the appraisal requirement. The appraisal is no longer required if a reliable automated valuation model (AVM) estimate can be provided by the GSEs.

Other enhancements include:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
  • Removing the current 125 percent LTV ceiling  for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;  and
  • Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.
Comments
  1. Mchl

    I called my bank who services my Fannie Mae loan (Suntrust) and they said they are not ready to take my loan application for refinancing. They said if I applied today, I will be subject under the old HARP rules and not the new one (October). I am afraid that they may be ready when the rates climb at 6%.

  2. Rob Burkley

    I wonder if the new lender/HUD will be required to provide the borrower a copy of the AVM to demonstrate how underwater they are?? Would you refi a home valued at 50K by AVM with the new loan amount 125K ? How does this help ?

  3. Dan Wilson

    What is a RELIABLE AVM? One that gives high or low values? Who makes this call? Who will they blame if this is wrong?

    What are they thinking?

  4. Ervin Wells Jr.

    Here we go, this is the second (management companies being the first) step towards destroying the appraisal profession. There are no RELIABLE AVMS, check zillow and note the value range and comps used. This is just another waste of tax dollars as Fannie and Freddie are government (our tax dollars) funded.

  5. Who is the AVM provider? Is there a way to find out who is this? FOIA maybe?

  6. What about all the homes that have seconds behind them? Can the seconds be enticed to subordinate to the refinance?

  7. Dan Wilson

    I hope that NAR get envolved and shows support to get good opinion of value and not AVM.

    ASA and NAIFA Send Joint Letter to FHFA, Fannie Mae & Freddie Mac Expressing Concerns on HARP Program Reliance of AVMs and Requesting a Meeting.

  8. Demonta Bush

    This sounds risky. AVMS can’t see what’s on the inside, or if the home is worth the value it displays. Wow! Who made this decision?

  9. I would like to know the rule on non-performing seconds that re-perform in order to get the refinance of the first at the lower rate? Of course subject to a subordination.

  10. Come on! Does it really matter what the value is? These loans are already made and the GSE’s are on the hook for them. Doesn’t it make sense to allow the rate to go down vs strategic default which is what is happening now?

  11. Here we go again!!

    And no appraisals??

    Where are the regulators???

    sw

  12. Kelley Johnson

    Has anyone addressed an underwater borrower being able to utilize the mortgage interest deduction on their federal income tax return on a loan that exceeds the fair market value of their home? IRS Pub936 states it is not allowed. It seems there could be some implications here. Anyone agree?

  13. Thomas

    Can anyone tell me a HARP 2.0 lender that isn’t requiring an appraisal? All the big names I have checked want on the order of $400 to start the process. I have read enough reviews of bait and switch interest rates that I am reluctant to pay such money up front to have that happen.

  14. KayD

    Wells Fargo plays the bait and switch with this one. We responded to a letter sent to us offering the new HARP Express refi only to get 30 days into the process and be told they haven’t actually implemented the new rules and won’t be until February 2012. I found the new guidelines with no LTV on fixed mortgages and had to explain it to them only to be told by a loan processor, “We all work on commission, and whatever the path of least resistance to get you into the loan process is what we will tell you”. Wow! Why did we bail these jerks out again? It certainly was NOT so they could pass on the love to the consumers. BEWARE OF WELLS FARGO!!! HONESTY IS NOT THEIR POLICY!!!

  15. dave

    the company i work for is a lender for these programs and i think it’s an excellent program. it’s designed to make home mortgages more affordable–that’s all. GSE’s logic is–they already own the loan so let’s make it more affordable. the fact they won’t require appraisals makes my job so much easier. HVCC ruined the lender/appraiser relationship, so it’s nice to have a program that takes the appraiser out of the equaiton. the appraisers have gone to the other end of the spectrum and so steadfast in their reports that there’s never any option for debate–not for value, but for condtions, adjustments and “subject to” items-opinions are not absolute and as long as appraisers continue to think their word is law, i’ll happily embrace any program that removes them from the process

  16. “And no appraisals?? ” Problem with appraisals are blind appraisers who think they know a comp when they *don’t* see one. They are one of the reasons for the lousy housing market though not the only reason. I’d suggest hiring one who is reputable and associated with a top rated association. Unfortunately, today that is no longer possible as appraisers are all too often chosen by alleged third-party operators who are connected with mortgage brokers and lenders. These operators, ever mindful of their piece of the blueberry pie, typically hire el cheapo appraisers who don’t know their elbow from the side of a barn.

  17. DAP

    I am trying to refi through HARP and my current lender required an appraisal. The appraiser said that the floors were sloping (90-year-old house) and that they might want to get a foundation inspection. So now the lender wants ME to pay for a foundation inspection AND pay to repair any foundation damage found! I so wish I hadn’t had to have an appraisal — I’d probably have closed by now.

  18. JMA

    I’ve paid for three appraisals over the last year and not a one has come close to another. If you are interested in refinancing your existing loan to a lower rate – having an appraisal shouldn’t matter. I’m tired of paying for an appraisal that includes certain considerations one time and others another. There was a time when a good customer could call their bank and refinance an existing loan in good standing with nothing more than a phone call and a single page updating the loan. This whole appriasal thing is a sham – the loans are under water. It’s pretty simple. The other issue on this whole “remodification” scam is the hit on the credit score. Every inquiry made by a bank decreases your score and like the apprisals – each score from each credit bureau is different. The whole thing is a joke. There is no help for folks that are current and have always been current. Best to just hunker down and plan on staying put.

  19. KLC

    As a lender, I agree that taking the appraisers out of the equation on these refinances is a good thing. It seems to me that it serves no purpose and is just charging the borrower an unneccesary $400 fee. Nothing against appraisers but we already know we are underwater on the value-thats kind of the point of the refinance. The requirements of the refinance are set up to help people who have been paying their current higher mortgage and are not likely to default AFTER we lower it?!

  20. I just did a HARP APPRAISAL.

    JMA NEEDS TO PUT DOWN THE REFINANCE CRACK PIPE

    APPRAISERS HAVE NO CONTROL OF THE NEW REGULATIONS.

    BLAME THE IDIOT PRESIDENT YOU ELECTED INTO OFFICE.

  21. Steve

    I just got off the phone with our current mortgage company. They said my loan is a Freddie Mac. When I went on FM website, put in my address, it said it wasn’t. Any thoughts?

  22. I have a 5 year fixed interest only at 51/4% by Washington Mutual bank (GOD BLESS HIS SOUL) which now called JP MORGAN CHASE.
    I tried 3 times to have them modify the loan when it was about $50k under weater, it was denied 3 times, The loan is owned by the bank and it is now$3k under, How can I get it refinance, before i walk away from it? Mr. Obam, why did you gave all this Billions to bank? Instead, you could have every the amout to do it them selves.

  23. Score

    My attempt to modify thru current Lein holder (wells) turned out to be a bait and switch. I was charged $650+ for an appraisel, when I was told no appraisel needed. After weeks of processing I was contacted to say I Do need an appraisel. They rejected my refi. I complained an got half of the $ back

  24. Barbara Manning

    Has anyone addressed an underwater borrower being able to utilize the mortgage interest deduction on their federal income taxes? The whole thing is very confusing. Is this issue going to create a need for a homeowner to obtain an appraisal yearly, in order to determine which part of their current mortgage is underwater, and therefore not able to be used to claim Mortgage Interest when Itemizing Deductions?

    Thanks!

  25. I dont think its a possible, the appraisal is never ignored and its needs should be most obvious even thouh the automated valuation model works.

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