Seize the Opportunities, Overcome the Complexities: Guide to HARP 2.0

Refinances have been responsible for 71.6 percent of originations in the first six months of 2012 and the revamped Home Affordable Refinance Program deserves much of the credit.

HARP activity increased 93.8 percent between the final quarter of 2011 and  the first quarter of 2012, then increased an additional 34.7 percent in the second quarter on the wings of a new securitization option for refi mortgages with loan-to-value ratios above 125 percent. Business through the first two months of the third quarter was on track for a 21.0 percent gain from the second-quarter mark, mostly stemming from a projected 31.2 percent increase at Fannie Mae.

The HARP program, with its ‘captured audience,’ is boosting mortgage bankers’ profits, and smaller firms, credit unions and banks are getting in on the action. IMF data also reveal that HARP borrowers pay measurably higher mortgage rates than do those with LTVs below 85 percent. Virtually all sellers to both Fannie Mae and Freddie Mac charged higher rates. HARP 2.0 is predicted to offer as much as $12 billion in mortgage banking revenue this year.

However, there are challenges and hidden surprises awaiting as you think about going into this program and after you’re up and running. This new report from Inside Mortgage Finance (as usual with no vendor support) offers the nuts and bolts of HARP, what lenders need to consider, as well as what’s working for those who’ve already jumped in.

You’ll find facts and tips, such as:

  • Treat HARP 2.0 as a project rather than just a product
  • Value the useful HARP 2.0 Pricing Matrix
  • Check your portfolio to see how many loans fit into this product
  • Understand the challenges and tips for implementation
  • Take advantage of the huge retention opportunity
  • How to motivate LOs to sell product
  • Different programs from both GSEs
  • Train your team to be onboard for best results

 

Partial Table of Contents

Comparison of HARP Programs

-- HARP Eligibility

-- Representation and Warranties

-- Same Servicer Versus New Originator

-- Pricing Comparison Scenarios

-- Potential HARP 3.0

HARP 2.0 Documentation

-- Differences Between Fannie and Freddie

-- HARP 2.0 Pricing Matrix

-- HARP 2.0 FAQ

Lender Perspective

-- Keys to a Successful Program

-- Experience with HARP 2.0

-- Issues to Watch Out For

-- Selling Points for Loan Officers

-- Channel Selection and Leads

-- Marketing to Borrowers

Profitability

-- Higher Interest Rates

HARP Volume

-- Volume Projections

 

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Poll

Over the next six months we plan to hire this many more additional loan officers:

1 to 10 (We're being careful.)

31%

11 to 30 (We're optimistic.)

10%

More than 30 (We're in a growth mode as the banks get out.)

31%

We're cutting back. (Are you nuts? It's ugly out there.)

29%

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