Fannie Mae and Freddie Mac finally gave lenders the green light on Monday that their automated underwriting systems are ready to process HARP 2.0 loans.
Cole Taylor Mortgage immediately issued the specifications to its retail branch managers and nationwide network of 400 mortgage brokers.
CTM has been preparing to participate in the expanded Home Affordable Refinancing Program, according to president Willie Newman. "We were just waiting for" the agencies to issue the guidelines, he said in an interview.
The HARP 1.0 program was rolled out in May 2009 to facilitate the refinancing of Fannie and Freddie guaranteed loans with loan-to-value ratios up to 125%.
HARP 2.0 eliminates the 125% LTV cutoff and makes other enhancements to encourage more refinancings of high LTV loans, including reduced loan buyback risk.
The buyback protection is dependent on Fannie and Freddie's underwriting machines approving the loans, however.
That gave the large servicers an advantage in refinancing high LTV GSE loans over the past three months.
Now other lenders will be able to compete with the large servicers.
Newman noted that CTM has experienced strong loan performance on the HARP 1.0 loans the Ann Arbor, Mich.-based mortgage banking company has originated.
And he "feels comfortable" with the buyback protection provided under HARP 2.0.
Newman expects to see a "pop" in refinancings due to HARP 2.0. But he stressed that CTM wants sound loans and can be originated and processed effectively.
"We are not looking to double our volume," Newman said.
CTM is a subsidiary of Cole Taylor Bank, Chicago.
