The responses to the 3Q12 Federal Reserve Senior Loan Officer survey showed that capacity constraints and issues with cross-servicer refinances remain significant challenges to the Home Affordable Refinance Program, according to Barclays Capital analysts. The results are aligned with the previous survey.
Roughly 60% of the banks listed these two factors as being the most noteworthy hurdles in their ability to refinance more loans under the program.
By contrast, bank-specific restrictions on higher LTV and lower FICO loans in addition to higher documentation requirements compared with HARP guidelines appear to be less of a hindrance, according to the survey data.
In fact. Barclays analysts said that the HARP program is becoming more efficient. For instance, of the lenders that are somewhat involved in HARP, 66% reported expecting more than 60% of the applications to be approved.
Among the big banks that comprise over 95% of the assets of all banks in the panel, 76% answered that they anticipate over 60% of applications to be approved. This illustrates that there has been continual progress in making the HARP program more effective, analysts wrote.
Changes in the HARP program guidelines, however, are unlikely to have a considerable impact on capacity constraints. However, Freddie Mac's recently announced changes to cross-servicer refinances can potentially relieve cross-servicer refinance pressures, which can boost the number of refinances under the HARP.