by Calculated Risk on 2/27/2012 05:02:00 PM

From Bloomberg: U.S. Refinancing Program Garners ‘Tremendous Borrower Interest,’ FHFA Says

A program designed to help homeowners who have lost equity in their properties has generated “tremendous borrower interest,” said Edward J. DeMarco, acting director of the Federal Housing Finance Agency.

DeMarco made his comments in written testimony prepared for delivery tomorrow to the Senate Banking Committee.

The key to the new HARP program is the elimination of the representations and warranties on the original loan for the lenders. If the lenders can get borrowers to refinance (only loans owned or guaranteed by Fannie and Freddie), the lenders will no longer be responsible if the original loan defaults. This is important for the banks (these are well seasoned loans, so it makes sense for Fannie and Freddie too).

The elimination of Reps and warrants for the original loans applies to Desktop Underwriter® (DU) and that will not be updated until sometime in March. The lenders and servicers know which loans are 1) owned or guaranteed by Fannie and Freddie, and 2) qualify for HARP. The lenders are very motivated to get borrowers to refinance ... and the borrowers will be very motivated to get much lower mortgage rates. So it should be no surprise that there is "tremendous borrower interest"!