HARP 2.0's first phase is now underway. Seller/servicers that control GSE MSRs appear to be in the best position when it comes to refinancing high LTV Fannie Mae and Freddie Mac loans.The GSE regulator and Obama administration officials had hoped to make the process more competitive, allowing “new” seller/servicers to refinance loans controlled by others. But it now appears that servicer-against-servicer competition won't get under way until March when the GSEs get around to updating their automated underwriting systems to accommodate Home Affordable Refinancing Program revisions.

In the meantime, the current servicer can take advantage of the HARP 2.0 changes, which include waivers of representations and warranties on the original loan. “It would be in the current servicer's best interest to crank out these refinancings right away before the new servicers start picking them off,” said one industry executive.

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