As the HARP program is extended, new policies are being enacted to allow for more refinances to be underwritten through DU Refi Plus. The updates include the following:
- Refi Plus mortgages will no longer be subject to a maximum loan-to-value ratio (LTV) if they have fixed rates and 30-year terms. Likewise, there are still no limits placed on combined loan-to-value (CLTV) and home equity loan-to-value (HCLTV) ratios.
- The requirement for property fieldwork, which covers interior and exterior inspection for appraisals on real-estate-owned (REO) properties, may be waived for single-unit properties, primary and secondary residences, investment properties, and condominium units. However, the waiver cannot be granted for two-to-four-unit properties, or any cooperative units or manufactured homes.
- Interest rate and loan amortization reductions will count as eligible borrower benefits.
- The lender must warrant and represent that the property for which the loan refinance is being sought is not in or a part of a condominium hotel/motel, a cooperative hotel/motel, a houseboat project, or a timeshare/segmented ownership project. Under the new warranty and representation policy, houseboats and timeshare properties have been included for the first time.
- The cap on loan level price adjustments (LLPAs) plus the adverse market delivery charge (AMDC) is effectively 0% for HARP loans with amortization terms of 20 years or shorter.
- A verification of employment (VOE) that is submitted to lenders for qualifying purposes must include documentation of the borrower’s year-to-date income.
- When verifying employment, income from a second job will not be counted unless the borrower has been employed and earning income there for at least 12 months.
- A minimum two-month reserve requirement applies to second home transactions. For investment properties, six months of reserves are required.