The responses to the 3Q12 Federal Reserve Senior Loan Officer survey showed that capacity constraints and issues with cross-servicer refinances remain significant challenges to the Home Affordable Refinance Program, according to Barclays Capital analysts. The results are aligned with the previous survey.
Roughly 60% of the banks listed these two factors as being the most noteworthy hurdles in their ability to refinance more loans under the program.
By contrast, bank-specific restrictions on higher LTV and lower FICO loans in addition to higher documentation requirements compared with HARP guidelines appear to be less of a hindrance, according to the survey data.
In fact, Barclays analysts said that HARP is becoming more efficient. For instance, of the lenders that are somewhat involved in HARP, 66% reported expecting more than 60% of the applications to be approved.
Among the big banks that comprise over 95% of the assets of all banks in the panel, 76% answered that they anticipate over 60% of applications to be approved. This illustrates that there has been continual progress in making HARP more effective, analysts wrote.
Changes in HARP guidelines, however, are unlikely to have a considerable impact on capacity constraints. However, Freddie Mac's recently announced changes to cross-servicer refinances can potentially relieve cross-servicer refinance pressures, which can boost the number of refinances under the HARP.
