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The Obama adminstration announced broad outlines of the revised Home Affordable Refinance Program, on Oct. 24th.   Fannie Mae and Freddie Mac issued guidance last week that filled in most of the details.

Making sense of the story.

HARP 2 greatly reduces or eliminates the risk-based fees Fannie and Freddie charge on many loans and virtually eliminates the chance that lenders will have to pay for losses on loans that go into default if they made underwriting mistakes.  It also vastly streamlines the underwriting process.

Although lenders can begin taking applications Dec. 1, it could take several months before the new loans are made.  Frannie Mae said it won’t begin buying certain types of refinanced loans until March.

To qualify, the existing loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.  the loan balance must be more than 80% of the homes market value.  The loan must be current for the last six months, with no more than one late payment in the last 12 months.  Those who previously refinanced through HARP are ineligible.

The new program improves on the existing HARP refi program by letting borrowers refinance into a new fixed-rate loan regardless of how much is owed.  The existing program caps the new loam at 125% of the homes market value.

Read More: http://www2.realtoractioncenter.com/site/R?i=P_3LpPM4O7vB0bC4VAA0JQ

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