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Solution Spotlights

FHA launches HARP-like program offering big borrower savings


The Home Affordable Refinance Program (HARP) launched in its original version in March 2009 has helped millions of homeowners take advantage of historically low interest rates. Now in the second iteration this program continues to cut through red tape and allows borrowers to save thousands on their mortgages.


Some of the flexibilities it allows include higher loan to value ratios, reduced documentation, reduced loan level price adjustments, the ability to transfer mortgage insurance coverage and more.


There has been much talk in the mortgage industry about when the Federal Housing Administration (FHA) would offer something comparable for the millions of Americans who have FHA insured loans. And we finally have our answer: June 11, 2012. As part of a multi-faceted mortgagee letter issued March 6, 2012 FHA announced modifications to its existing streamlined refinance program to further assist homeowners with mortgages originated prior to May 31, 2009.


The streamlined program has long been available without a requirement for a new appraisal, allowing underwater borrowers to participate. However recent increases to the mortgage insurance premium structure made it nearly impossible to provide a refinance with a tangible benefit to the borrower.


The announcement reduced Upfront Mortgage Insurance Premiums (UFMIP) from 1.0% to .01% and the monthly Mortgage Insurance Premium (MIP) to a static .55% regardless of loan amount, term or loan to value. A consumer with a $100,000 mortgage will save approximately $65 per month and over $22,000 in finance charges. These changes should finally allow homeowners with FHA loans to do what their neighbors with Fannie Mae and Freddie Mac owned loans have been doing for 3 years.


For more information on AmeriCU and how they can assist your credit union, please contact Ben Schweder at (800) 242-0833, Ext. 6026.

--By Kim Renock, CMB, CRO AmeriCU Mortgage

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