Some lenders are already chomping at the bit on 'HARP 2.0' and plan to hit the ground running to refinance Fannie Mae/Freddie Mac-backed mortgages when the application process commences on Dec. 1.
Under the new, detailed guidelines released earlier in the week lender/servicers can begin processing new HARP loans manually and don't have to wait for the GSEs to update their automated underwriting machines in March.
"I have demand right now waiting to get done on 12/1,” said Kevin Universal, a product development manager at Genworth Financial, a mortgage insurance company that will offer coverage on the refinancing program. “We will get some lift.”
Under the detailed guidance released this week, the GSEs have waived the servicer's representation and warranty obligations for the original loan, essentially removing the new lender's risk when it comes to the valuation or appraisal on the new loan.
The GSEs also opened the door for lenders to solicit homeowners to refinance their Fannie/Freddie mortgages that have loan-to-value ratios north of 80% -- with some caveats.
"This is going to be an opportunity for the regional lenders to build market share,” according to CoreLogic senior vice president Arlene Hyde.
But the outsiders are going to face competition from the large lenders who service most of the GSE loans."The major servicers want to protect their current customer base," she said.
Genworth vice president Anthony Guarino told ASR sister publication National Mortgage News that his company is ready to transfer mortgage insurance policies from the existing servicer to the new one, no matter who the originator is. "We will be ready to go Dec. 1," he said.
The GSEs also removed a cap on refinancing mortgages with loan-to-value ratios above 125% to reach severely underwater borrowers who have remained current on their mortgages.
But originators may be hesitant to jump in and refinance these higher LTV loans until they see if a market develops for them, said FBR Capital Markets analyst Edward Mills.
"They don't want to get stuck holding the bag with an illiquid product or pay a premium to get it securitized," Mills said in an interview.