FHFA Prepping HARP Market Campaign, Wary of QM Rule

GSE seller/services refinanced 1.1 million high LTV loans under the Home Affordable Refinance Program in 2012 and the Federal Housing Finance Agency wants to build on that success by launching a marketing campaign.

“We have seen great success with the HARP program,” FHFA acting director Edward DeMarco told a House committee Tuesday morning.

He noted that 43% of the 1.1 million HARP refinancings involve underwater borrowers with loan-to-value ratios greater than 105%.

“We are getting prepared to undertake a marketing campaign to further reach out to let borrowers know it is a legitimate program and it really can help you,” he testified.

The FHFA acting director noted the GSEs have already notified borrowers with Fannie and Freddie loans that they might be eligible for a HARP refinancing.

At the hearing, DeMarco expressed concerns the qualified mortgage rule issued by the Consumer Financial Protection Bureau will push more business to Fannie and Freddie.

The QM rule allows loans that meet Fannie and Freddie automated underwriting requirements to be considered QM compliment. And FHFA is comparing the underwriting of QM loans and the underwriting standards of Fannie and Freddie loans that go beyond QM underwriting standards.

“We are re-examining this to get a sense of what the impact will look like,” DeMarco said. And he noted that the impact “appears to run counter” to FHFA’s goal of trying to contract Fannie and Freddie’s share of the mortgage market.