The Obama Administration is not happy with HARP 2.0 program changes that the GSEs are implementing because it doesn't create enough competition between servicers to refinance borrowers with high LTV loans.
As part of his plan to spur mass refinancings, President Obama sent a proposal to Congress to made additional changes to the Home Affordable Refinance Program that the GSE regulator approved back in October.
At the time, Federal Housing Finance Agency acting director Edward DeMarco said his reforms would increase competition, allowing “different” lender/servicers to refinance a borrower whose loan is controlled by another shop.
However, experts in evaluating mortgage securities have concluded that the HARP 2.0 program approved by DeMarco did not go far enough.
In a new report, the Amherst Securities Group claims HARP 2.0 still provides “special benefits” to the controlling servicer when it comes to underwriting requirements and protections from loan buy-back requests.
“The most effective provision at accelerating refis should be relaxing rules around different servicer refis, which would allow borrowers stuck with servicers who are inefficient refinancers (like Bank of America) to look elsewhere,” a new ASG report says.
ASG analysts suggest that the Obama administration does not really expect Congress to act on the HARP proposals.
“We believe these provisions were designed to put pressure on FHFA to re-evaluate pieces of HARP 2.0 and create a HARP 2.5, which goes a bit further in facilitating refinancing,” ASG analysts write in their report.
