“We estimate at this point, there are still roughly 1.5 million HARP-eligible borrowers,” the strategists say in an April 12 report.As more borrowers improve their credit standing another 400,000 borrowers could become eligible for the Home Affordable Refinance Program that has been extended by the GSE regulator through 2015.
“Specifically, time can be a friend to borrowers who may not currently meet the delinquency criteria” for a HARP refinancing. And keeping the program open could “allow for more upside surprises,” according to the strategists. Fannie Mae and Freddie Mac borrowers must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months to qualify for a refi.
Mortgage strategists Chris Flanagan and Matthew Carr also note the program extension will lead to more MBS backed by HARP loans that are very attractive to investors due to prepayment protection. Analysts at Amherst Securities Group LP point out that the Federal Housing Finance Agency extended HARP for two years but did not change the June 1, 2009 cut-off date. GSE loans originated after May 2009 are not eligible for a HARP refinancing. Underwater borrowers that take advantage of the program cannot refinance again, which protects MBS investors from prepayments. “The extension of the program on current terms further blunts any political will to use the end of the program as an attempt to change the cut-off date,” an April 12 Amherst Mortgage Insight report says.