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
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 Schwederat (800)
242-0833, Ext. 6026.
--By Kim Renock, CMB, CRO AmeriCU
FHA launches HARP-like program offering big borrower savings