FHFA Modifies High LTV Streamlined Refinance Program, Extends HARP Through December 2018

The Federal Housing Finance Agency, Washington, D.C. yesterday announced modifications to the streamlined refinance program for borrowers with high loan-to-value ratios.

Last August FHFA announced that Fannie Mae and Freddie Mac would implement a High LTV Streamlined Refinance program to provide liquidity for borrowers current on their mortgage but unable to refinance because their loans have LTV ratios that exceed the GSEs’ maximum limits.

The new modifications establish an eligibility date that makes the program available for loans originated on or after October 1, 2017. FHFA said the eligibility date was necessary to preserve the objectives of the GSEs’ credit risk transfer program, which allowed the GSEs to transfer a portion of risk from taxpayers to investors.

The GSEs will modify the structure of future credit risk transfer transactions to accommodate the High LTV Streamlined Refinance program by allowing the newly refinanced loans to return to the reference pools in place of loans that prepaid. “This will help preserve credit loss protection on the loans without unwinding the protection paid for through CRT transactions,” FHFA said.

To ensure that high LTV borrowers who are eligible for the Home Affordable Refinance Program continue to have a refinance option, FHFA also directed the GSEs to extend HARP through December 31, 2018. The agency noted that more than 3.4 million homeowners have refinanced their mortgages through HARP but said more than 143,000 homeowners could still benefit from the program.