Barclays Capital believes that at least one of Freddie Mac’s proposed changes to its HARP 2.0 program will potentially increase prepayments for pre-HARP loans.

Freddie’s announcement suggests that the Open Access offering within its Relief Refinance program is being evaluated for changes to maximize its reach and effectiveness, specifically by encouraging more cross servicer refis. Barclays thinks that this will most likely be done by easing the cross-servicer reps and warranty requirements, potentially placing them in line with those for the same servicer. They refer to the same servicer Relief Refinance program, which eliminates most rep and warranties for same-servicer refis of loans with LTVs over 80.

“We think this is a significant development in the HARP program. If structured correctly it is likely to increase speeds on pre-HARP pools, especially those of slower paying servicers. However, exact speed impact will depend on the final details,” wrote Barclays analysts,

Freddie’s announcement about its plans to align the requirements for <80-LTV loans with >80-LTV loans would have only negligible impact, Barclays said. This is because Fannie Mae already has uniform rep and warranty waiver guidelines across LTVs.

Barclays expects Fannie Mae to follow Freddie’s suit with similar changes.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.