Lenders are finding they can make a bundle refinancing underwater homeowners under the Obama administration’s revamped Home Affordable Refinancing Program (HARP), and CoreLogic has rolled out a new service that helps loan originators identify eligible borrowers.
CoreLogic HARP 2.0 lead-list service searches the company’s vast loan database, applying automated valuation models (AVMs), lien information, and other analytics to identify more than 2.3 million borrowers CoreLogic says have a "strong likelihood" of potential eligibility for HARP refinancing.
"Our ability to provide specific homeowner data, highly accurate loan-to-value estimates, identification of lenders, current owner occupancy status, and liens associated with a property can be especially helpful to originators looking to build or defend their current portfolio," the company said.
When it was launched in February 2009, the HARP program was intended to help "responsible" borrowers with little or no equity in their homes refinance without having to purchase additional private mortgage insurance.
Participation in the program — available only to homeowners whose loans are owned or guaranteed by Fannie Mae and Freddie Mac — fell short of initial expectations.
After raising the initial 105 percent loan-to-value cap to 125 percent, last fall Fannie and Freddie’s regulator, the Federal Housing Financing Agency, dropped the LTV cap altogether in rolling out what’s been dubbed "HARP 2.0."
As an incentive to boost participation, Fannie Mae and Freddie Mac are releasing lenders who sign off on a refinanced loan from some legal liabilities associated with the original loan.
The mortgage giants also have the go-ahead to sign off on refis without an appraisal if they have reliable AVM estimates for the property.
The revamped program is popular with lenders, who can make as much as $10,000 per loan on HARP refinancings, National Mortgage News reports. Loan originators make more money when reselling HARP loans on the secondary market, because borrowers are unlikely to prepay their mortgage because of they have little or no equity in their homes.
Borrowers refinancing under HARP are also paying higher interest rates than non-HARP borrowers, Housing Wire reports, citing an analysis by Amherst Securities Group.
Lenders only benefit from Fannie and Freddie’s waiver of seller servicer "representations and warrants" when they refinance loans they previously originated.
That means borrowers are effectively locked into refinancing with their existing lender, "which conveys tremendous pricing power to the banks," Amherst said in its analysis.
Amherst found that three lenders — Wells Fargo, JPMorgan Chase, and Bank of America — have handled more than 60 percent of HARP refinancings.
According to the most recent numbers from FHFA, lenders had completed 1,021,849 HARP refinancings through December 2011, although only 90,616 of those were for borrowers with loan-to-value ratios above 105 percent.