Appraiser Income

We may have a temporary “fix” for the fiscal cliff, but the real estate industry has its own unique set of factors that will determine the 2013 landscape, including improving home prices, shrinking REO inventory, stubbornly persistent unemployment numbers, and the tenuous global economy.

October Research and presenting sponsor Windward have teamed up to produce the 2013 State of the Industry Report, an in-depth report that takes a look at how the economic and regulatory landscape will impact Realtors, lenders, homebuilders, title agents, appraisers, escrow officers and more.

Download the report today to discover what top economists and industry leaders have to say about 2013, and what you need to do to prepare for the growing market amidst vast regulatory changes.

http://www.valuationreview.com/VR/IndustryReport2013.aspx?utm_source=vwVRget&utm_medium=email&utm_campaign=VR_Tues_Enews

The Coming Crash In Mortgage Originations

We are finally heading toward the end of the Great Credit Crisis that began in 2007 as mortgage delinquency and default rates continue to drop. But another big event is coming, and it is inevitable. You can call this one the Great Origination Crash.

When mortgage interest rates rise again substantially, loan production will plummet as refinances dry up. And this time, total loan production is going to remain depressed for many years to come.

The new crash won’t happen this year, and it may not happen in 2013. However, it becomes far more likely for 2014, and it looks very likely to happen before the end of 2015.

Everyone knows that rising rates reduce refinancing. We’re in the middle of a refinancing boom period, and they always come to an end.

But this time, there are two new twists. The coming crash will be more severe than normal, and the post-crash total mortgage production is near-certain to remain subdued for a very long time – maybe even for a decade.

It’s the length of the coming dry spell that really will make the new crash different. To understand how this could happen, let’s take a look at how the mortgage industry has evolved in the past two decades.

The first big refi boom was in 1993. That year, there were two refis produced for every purchase loan. Interest rates rose in 1994, and the total U.S. mortgage production in 1995 (refinances plus purchase loans) sank 46% below the 1993 level.

In 1999, we also saw the end of a refi boom that had peaked in 1998. By year 2000, total mortgage production dipped 33% below the 1998 totals. It would have been worse, but the purchase market was stronger.

Today, we’ve been through a much more extended refi boom period, stimulated in part by the Home Affordable Refinance Program. Refinances outnumbered purchase loans by about two-to-one in 2009, 2010 and 2011. In 2012, refinances have outnumbered purchase loans by an unprecedented three-to-one ratio.

Moreover, when prior refi booms ended, lenders had more options to deal with the problem. In 1994, lenders opened up the subprime purchase loan business. In 1999, they could offer subprime refinances as well as purchase loans.

After the refi boom of 2003, history’s largest, lenders rolled out interest-only loans and pay-option adjustable-rate mortgages. These loans kept the refi market going to some extent because they lowered monthly payments even as interest rates were rising.

But all of these options increased credit risk. Now, they are gone – so when refis crash again, there won’t be much volume left.

A gradually improving market for purchase loans can’t possibly make up the difference. We believe total annual mortgage volume will drop by 50% or more in the coming crash. And that’s just the start of the story.

Super-low mortgage rates hit the scene in 2009. We’ve now been through four straight years of incredibly low rates, thanks to the Federal Reserve.

By July of 2012, SMR’s property records database showed more than 33% of all existing mortgage borrowers had loans with rates below 5%, and 53% had loans with rates below 6%. By the end of 2013, these numbers will be higher. Thus, all of the folks with super-low-rate loans may never refinance again.

At the same time, today’s low-rate loans pay off principal faster than the norm. And record numbers of people have been refinancing into 15-year or other short-term mortgages, which also pay off principal fast. This means fewer borrowers owe large sums. Yet, it’s the borrowers who do owe a lot that are most incented to refinance.

In fact, our July study found that in total, 74% of all existing borrowers either had low-rate existing loans, short-term mortgages or loans with balances below $100,000. All would be unlikely future refinancers.

By the end of 2013, the universe of unlikely future refinancers will only increase, perhaps to 80% or 90% of the borrower universe. So when the new crash begins, we’ll be left mainly with the purchase mortgage market for a long time to come.

The purchase market was only $480.7 billion in 2011; it is increasing some this year and may increase a little more in 2013. But it stretches credulity to think that purchase loans will come even remotely close to making up for the loss of refinances, which will probably be around $1.5 trillion for 2012.

What the Fed gives today, it takes back later. The extremely long period of super-low rates has removed most borrowers from the refi market of the future.

However, the next crash also will have some positive effects. Prepayment problems with serviced loans will largely disappear for an extended time. And home equity lending will surely increase. Homeowners are again building equity against which to lend, thanks to faster principal payoffs from low-rate mortgages and 15-year mortgages, plus rising home values.

The next crash and its aftermath will be the worst for mortgage bankers that depend on origination volume for most of their income. It will be a lesser issue for big servicers, and a positive for home equity lenders.

via Mortgageorb

Hold Times, Application Status, and Renewal Letters

Due to a high volume of renewal applications, The Office of Real Estate Appraisers’ (OREA) phone system has exceeded capacity on several occasions, which has resulted in callers experiencing a busy signal. When a caller is able to get through to the office, the caller will experience longer than normal hold times. This excessive call volume has resulted in delays in application processing time.

To avoid longer than average hold times, you may check the status of your application from the OREA website by selecting the “Appraisers” tab, then select “Check Your Application”, or you may click on the image below and go directly to the “Search Applications” page.

Once on the “Search Applications” page enter the required information. The results will give you: The date the Application was Received, the date a Request For Information was sent (if any), the date the Admission to Exam Letter was sent, the date the Admission to Exam Letter Expires, and the date Additional Information was Received.

Identify the date your Application was received, as illustrated in the example below. Our current processing time is 90 days* from receipt of complete application package. If you are sent a request for additional information, our processing time will reset to 90 days upon receipt of your most recent correspondence. The information provided on the Check Your Application link is the same information you will be given over the phone.

OREA is now sending out renewal letter reminders, however, NO renewal letters were sent to Licensee’s with license expiration dates from January 1, 2013 through June 30, 2013. All Licensees are expected to be aware of their license expiration date and the renewal cycle associated with the expiration date. There are two different renewal cycles for your license. Licensees can identify the specific licensing period by clicking on the Search for an Appraiser button below.

Once the Licensee has searched their license number or name, the renewal type will be identified as either:

USPAP (requires a 7 hour USPAP certificate)
Full CE (requires the remaining 49 hours of continuing educations certificates, which must include the NEW 4 hour CA and Fed Law certificate)

Please allow for 90 days for processing time.

EXECUTIVE SUMMARY
In August 2012, the Texas Appraisers and Appraisal Management Survey surveyed a total of 1,584 appraisers and 55 appraisal management companies doing business in the state of Texas. The questions were specifically designed to achieve the following:

– Clearly distinguish between the fees paid to appraisers by Appraisal Management Companies (AMCs) and fees paid by non-AMC clients for residential appraisals.

– Capture any difference in fees paid by property type: single family, condominium, size or square footage, or other factors.

– Capture the impact on fees by market area or locale: urban vs. rural, (MSAs, county, zip code, etc.).

– Determine whether appraiser qualifications (experience, education, specialization) impact fees paid to appraisers.

– Determine how far the appraisers travel for an assignment; and if from another state or distant region, how much time they spend gathering the data for the appraisal.

– Determine what fee structure the AMCs offer appraisers for residential appraisals.

– Determine whether those fees vary by property type.

– Determine if there is a difference in the fees they pay based upon urban, rural or other location factors.

– Determine whether AMCs pay differing fees to appraisers based upon their experience.

A brief highlight of the survey results follows:
– Three out of ten or 30 percent respondent appraisers do not complete assignments for Appraisal Management Companies compared to 6 percent who exclusively do. Fortyone percent of respondents complete at least half of their assignments for Appraisal Management Companies; 57 percent complete half or less. Nearly one-fifth (18%) of respondent appraisers complete appraisals exclusively for lenders, individuals, or other non-Appraisal Management Companies. A similar number (15%) do not complete any appraisals for lenders, individuals, or other non-Appraisal Management Companies, with 45 percent completing between 50 and 100 percent, and 52 percent completing between 0 and 50 percent. The majority of respondent appraisers received between $300 to $450 for a residential appraisal from Appraisal Management Companies, compared to receiving $350 to $450 from lenders, individuals, or other non-Appraisal Management
Companies.

– Ninety-eight percent of Appraisal Management Companies noted that the complexity of the property would cause an increase in the fee followed by 85 percent citing the location being in a rural area and the large size of the property as affecting the fee. An
increase in fee is also associated with a greater distance traveled to complete the appraisal. According to 82 percent of the respondents, one factor that would not affect the fee is the property being located in a low cost-of-living area.

EXECUTIVE SUMMARY
In August 2012, the Texas Appraisers and Appraisal Management Survey surveyed a total of 1,584 appraisers and 55 appraisal management companies doing business in the state of Texas. The questions were specifically designed to achieve the following:

– Clearly distinguish between the fees paid to appraisers by Appraisal Management Companies (AMCs) and fees paid by non-AMC clients for residential appraisals.

– Capture any difference in fees paid by property type: single family, condominium, size or square footage, or other factors.

– Capture the impact on fees by market area or locale: urban vs. rural, (MSAs, county, zip code, etc.).

– Determine whether appraiser qualifications (experience, education, specialization) impact fees paid to appraisers.

– Determine how far the appraisers travel for an assignment; and if from another state or distant region, how much time they spend gathering the data for the appraisal.

– Determine what fee structure the AMCs offer appraisers for residential appraisals.

– Determine whether those fees vary by property type.

– Determine if there is a difference in the fees they pay based upon urban, rural or other location factors.

– Determine whether AMCs pay differing fees to appraisers based upon their experience.

A brief highlight of the survey results follows:
– Three out of ten or 30 percent respondent appraisers do not complete assignments for Appraisal Management Companies compared to 6 percent who exclusively do. Fortyone percent of respondents complete at least half of their assignments for Appraisal Management Companies; 57 percent complete half or less. Nearly one-fifth (18%) of respondent appraisers complete appraisals exclusively for lenders, individuals, or other non-Appraisal Management Companies. A similar number (15%) do not complete any appraisals for lenders, individuals, or other non-Appraisal Management Companies, with 45 percent completing between 50 and 100 percent, and 52 percent completing between 0 and 50 percent. The majority of respondent appraisers received between $300 to $450 for a residential appraisal from Appraisal Management Companies, compared to receiving $350 to $450 from lenders, individuals, or other non-Appraisal Management Companies.

– Ninety-eight percent of Appraisal Management Companies noted that the complexity of the property would cause an increase in the fee followed by 85 percent citing the location being in a rural area and the large size of the property as affecting the fee. An increase in fee is also associated with a greater distance traveled to complete the appraisal. According to 82 percent of the respondents, one factor that would not affect the fee is the property being located in a low cost-of-living area.

– Appraisers reported that factors that would likely result in an increased fee included a property in a rural location (63%), a large property (75%), a complex property (85%), and a property that would require greater travel to complete the appraisal (80%). The factors
that would not affect the fee included a property in an urban location (81%), a property in a high cost-of-living area (60%), a property in a low cost-of-living area (79%), a property with many appraisers in the area available to do the appraisal (72%), and an appraiser with greater experience (53%). Few factors would have the impact of decreasing fees, but 11 percent of respondents stated that having many appraisers in the area to do the work would decrease their fee.

– According to the respondent AMCs, the most important factors when selecting a residential appraiser were the appraiser’s experience (84%), followed by the previous experience for the company (76%) and the reputation for quality work (73%). Seventytwo percent of appraisers responded that their higher fees are due to refusing to work for less. Two-thirds (66%) stated that more experience was the reason for higher fees. Forty percent responded that having a specialization allows them to charge higher fees.

– The vast plurality (42%) of respondent appraisers completed assignments within 50 miles of their city. Sixteen percent complete assignments within 100 miles, while 10 percent complete assignments regardless of their location.

– Nearly all respondent appraisers (96%) hold a current license to conduct appraisals in Texas. More than three-fourths (76%) of respondents are male and 21 percent are female (3 percent refused to answer). Eighty-five percent of the respondents are white (including those of Hispanic origin). Five percent of the respondents are of Hispanic origin and 2 percent are African American. Fifty-three percent of the respondent appraisers have completed a bachelor’s degree, with 13 percent achieving a master’s degree and 2 percent completing a professional or doctorate degree.

To read the entire report – PLEASE CLICK HERE

U.S. Department of Housing and Urban Development will sell at least 40,000 distressed loans over the next year, generally in quarterly sales, in an effort to reduce total claims, cost and increase recovery on losses to the Federal Housing Administration Mutual Mortgage Insurance Fund.

The results of which, when considered by FHA independent actuary, should yield an estimate of an additional $1 billion in economic value to FHA’s Mutual Mortgage Insurance Fund in fiscal year 2013 alone by significantly reducing the expected severity of losses on loans sold through the program.

…continue reading the rest of this post: FHA to sell 40,000 distressed loans

Broker Price Opinions, Value Reconciliation, and other Alternative and Preliminary Valuation Products

The Office of Real Estate Appraisers (OREA) receives ongoing inquires from our licensee’s with questions regarding whether or not they can develop an opinion of value by doing Broker Price Opinions (BPO), desktop reconciliation of values, or a variety of other kinds of alternative and/or preliminary valuation reports. The answer to these questions can be found in the Uniform Standards of Professional Appraisal Practice(USPAP) and Title 10 of The California Code of Regulations.

The 2012-2013 edition of USPAP defines the word “appraisal” as:

(noun) the act or process of developing an opinion of value; an opinion of value. {page U-1}

(adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services. {page U-1}

Therefore, when developing an opinion of value, regardless of the reporting format (BPO, Reconciliation of Value, etc.), an appraisal is being performed.

Title 10 of the California Code of Regulations, Section 3701, specifically requires that every holder of a license shall conform to and observe the Uniform Standards of Professional Appraisal Practice (USPAP). Anytime an opinion of value for real property is reported by an appraiser licensed by the State of California, that appraisal must comply with USPAP! Therefore, prior to accepting any assignment, regardless of the format in which the opinion of value is provided, the appraiser must familiarize themselves with the applicable portions of USPAP and develop, report, and maintain records according to the applicable USPAP rules and standards.

Furthermore, if you are a registered Appraisal Management Company (AMC), Title 10 of the California Code of Regulations, Section 3577, requires that AMC’s must adopt reasonable procedures designed to ensure that all appraisal assignments completed by its independent contractor or employee appraisers are performed in accordance with USPAP. Although, delivering a USPAP compliant report is ultimately the responsibility of the appraiser, an AMC must be cautious about ordering valuation products that are not USPAP compliant.

The business model of the appraisal industry continues to change and new valuation products are, and will continue to be developed and requested in lieu of USPAP compliant appraisals. A California State licensed appraiser, when acting as an appraiser, is required to comply with USPAP. In some cases supplementing the requested reporting forms will be required to be in compliance with USPAP. In other cases, when compliance with USPAP is not possible, turning down the assignment maybe the only option. Remember-forms are not always USPAP compliant, however, USPAP compliance is always a repurement for a licensed appraiser the appraiser is!

My Daughter Summer and Wife Christie are participating in the 16th annual Susan G. Komen San Diego Race for the Cure® and we are asking for your help to reach my goal. Komen San Diego works hard to provide education, screening and treatment that saves lives in our communities. Now is the time to help. Komen San Diego needs your help. By providing funds to Komen for the Cure, you can be a part of their promise to end breast cancer forever.

…continue reading the rest of this post: My Daugher & Wife are Racing for the Cure – Susan G. Komen Foundation

A.G. Schneiderman Secures $7.8 Million Settlement With First American Corporation And Eappraiseit For Role In Housing Market Meltdown

One Of Nation’s Largest Appraisal Management Companies Was Pressured By Washington Mutual To Inflate Residential Real Estate Appraisals

Schneiderman: We Will Continue To Litigate Cases Arising From The Mortgage Crisis And Bring Wrongdoers To Trial If Needed

NEW YORK – Attorney General Eric T. Schneiderman today announced a $7.8 million settlement with eAppraiseIT, formerly one of the nation’s largest real estate appraisal management companies and its parent corporation, First American Corporation, for colluding with savings and loan giant Washington Mutual to inflate the values of homes. Today’s settlement resolves charges that the corporation violated appraiser independence laws, which regulate the conduct of real estate appraisers.

The settlement was entered into with CoreLogic Inc., formerly known as The First American Corporation and CoreLogic Valuation Services, successor-in-interest to its subsidiary eAppraiseIT.

“Coercion of appraisers to inflate home values and the erosion of appraisal independence directly contributed to the housing crisis. By giving in to lender pressure, these corporations violated a principle that is vital to restoring and maintaining a healthy housing market,” said Attorney General Schneiderman. “Today’s settlement demonstrates our office’s commitment to investigating the causes of the mortgage crisis and holding wrongdoers accountable. We will continue to litigate cases arising out of the financial crisis vigorously and take defendants to trial as needed.”

The Attorney General’s office originally filed a complaint against First American and eAppraiseIT, a company that performed over 260,000 appraisals nationally for Washington Mutual, Inc. (WaMu). The complaint charged that WaMu pressured eAppraiseIT to allow WaMu’s loan officers to select property appraisers for WaMu-originated mortgages. This was a clear violation of the Uniform Standards of Professional Appraisal Practice (USPAP) and federal and state law. This practice led to inflated property valuations and enabled WaMu to originate a greater number of mortgages than would have been possible had appraisals been performed by fully independent appraisers. Appraisal management companies are required to provide a buffer between bank loan staff and individual appraisers to eliminate pressure or conflicts of interest.

From early 2006 through late 2007, eAppraiseIT conducted some 10,000 appraisals for WaMu in New York. Thousands of these appraisals were conducted by appraisers who had been hand-selected by WaMu staff for a “proven appraiser list” with the expectation these appraisers would inflate property valuations, thereby allowing more home loans to close at higher values. eAppraiseIT also permitted WaMu loan officers to submit multiple reconsiderations of value, known in the industry as “ROVs,” often without any evidence of error or substantiation that would support WaMu’s efforts to increase the property values above the initial appraisal.

First American sought to have the case dismissed, arguing all the way to the New York Court of Appeals that New York’s action was preempted by federal law. The Court of Appeals rejected these arguments and held that federal law did not preempt the Attorney General’s claims for fraudulent and deceptive appraisal practices, noting that the federal law explicitly envisions a cooperative effort between federal and state authorities to ensure that real estate appraisal reports are objective and independent and comply with industry standards. The United States Supreme Court denied First American’s petition to hear the case.

This past June, the case proceeded to trial before Justice Charles Ramos of the New York Supreme Court. Witnesses presented by Attorney General Schneiderman included appraisers who testified that they stopped getting WaMu eAppraiseIT assignments despite years of satisfactory work, only to later discover they had been removed from the “proven appraiser list” because they refused to provide the values that would satisfy WaMu’s loan officers. Evidence introduced at trial included a 2007 email from a former WaMu sales office employee, stating, “The appraisal list that eAppraiseIT … is using has been totally scrubbed. But instead of keeping good appraisers, they went for the BADddd ones.” The Attorney General also produced expert testimony that First American’s appraisals were generally higher than would have been expected when using independent benchmarks of value for such properties.

The settlement provides that the defendants will pay $4 million in civil penalties and $3.8 million in costs, fees and disbursements incurred during this protracted litigation. In addition, the defendants, who are no longer in the appraisal business, agreed to comply with applicable federal and state appraisal standards if they reenter the appraisal business in the future.

The case was handled by Senior Trial Counsel David N. Ellenhorn, Deputy Solicitor General Richard Dearing, Assistant Attorney General Ellen Fried and Special Counsel Scott R. Wilson under the supervision of Chief of Consumer Frauds and Protection Bureau Jane M. Azia and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

FDIC Subpoena update

The Mortgage Recovery Law Group
“Who are they and what do they do?”

At FREA, we provide risk management services for thousands of appraisers and we’ve been doing so for roughly 20 years. In that time, we have seen a lot of strange and unusual happenings, but this one may take the cake. From what we have been able to learn so far, the Mortgage Recovery Law Group (“MRLG”) is a group of gunslinger lawyers from Glendale, CA hired by the FDIC to intimidate, browbeat, annoy, and generally harass appraisers with E&O insurance until they get paid something to go away. Officially, the MRLG is “helping” the FDIC recover money from people who caused the subprime mortgage meltdown, the failure of numerous banks, and the resulting drop in real estate values all over the U.S…. and we all know it was the appraisers who caused this.

In truth, this is yet another example of the government (aka Big Brother) hammering the little guy for something very minor while giving the real culprits (Wall Street, bank executives, etc) a free pass. The MRLG is the private firm purportedly hired by the FDIC to help pursue evil wrongdoers in the name of truth, justice, and the American way. However, what is actually happening is shocking. If the FDIC finds someone who did something terribly wrong after a bank is taken over, you would expect them to attack the wrongdoers. Unfortunately, your assumption would be incorrect most of the time. You see, no matter how bad the acts of the wrongdoer, the MRLG won’t sue them to recover anything unless they have insurance.

On the other hand, if you simply did an appraisal for XYZ Mortgage, then XYZ sold the loan to a bank that failed, then the FDIC took over the bank’s assets, then the FDIC discovered the homeowners stopped paying the mortgage, and then the house sold at foreclosure for less than the loan amount. You are almost certainly going to get sued if you have E&O insurance. How, you ask? Well, the FDIC will turn this loss over to the MRLG, and the MRLG will have the FDIC issue and sign what is known as a subpoena duces tecum which orders you to send the MRLG everything in your appraisal file plus a copy of your E&O policy. It’s a pretty scary document which recites several ominous provisions of the U.S. Code and is generally designed to frighten you into cooperating, It may also be one of the biggest abuses of government power since the McCarthy hearings.

Of course, your own cooperation actually ends up helping the MRLG build a case against you, a case which is totally dependent on whether you have E&O insurance. If you do, you get sued and if you don’t, you walk away. If you get sued, the MRLG asks for the sun, the moon, the stars, and lots of money, but all they really want is for your E&O insurer to calculate that it’s cheaper to settle than to try the case. In other words, all the MRLG is looking for is what we in the legal profession call a nuisance settlement. Simply put, if you are annoying enough, someone will pay you to go away.

Is this all legal? Maybe it is, but maybe it is not. Is this ethical? Maybe it is, but maybe it is not. Is this going to help the real estate market recover? Absolutely not!

By targeting the appraisers instead of the bank executives or Wall Street gurus or Congressional morons who really caused the collapse, the FDIC is extending the downturn unnecessarily. The E&O carriers who pay these nuisance settlements have to raise their rates to cover the losses, the appraisers who are getting sued over an appraisal they did 5 years ago are afraid the values in the appraisals they are doing today will get them sued again in another 5 years, so they are being ultra-conservative, and the FDIC ends up paying a big chunk of the money collected to the lawyers at the MRLG. In the end, nobody wins except the real bad guys who took their money and ran far, far away.

Stay tuned for more on this saga and watch:

1. FREA helps appraisers in the FREA program fight the FDIC subpoenas
2. FREA files a Freedom of Information Act request with the FDIC to find out, among other things, how much the MRLG is making off this scam
3. FREA meets with members of Congress to tell them about this ridiculous scenario

If your Risk Manager and/or E&O Provider isn’t working to protect you this way, maybe you need to think about a switch.

At FREA, we’ve got your back!

Best regards,
The FREA Team
800.882.4410

Appraisal costs would be eliminated in a proposed bill that would give homeowners with mortgages held by Fannie or Freddie and who have equity in their homes the same opportunity to refinance through the Home Affordable Refinance Program as those with underwater mortgages, Mortgage News Daily reported Sept. 11.

The Responsible Homeowner Refinancing Act, sponsored by Sens. Robert Menendez, D-N.J., and Barbara Boxer, D-Calif., would extend guidelines and reduce fees under HARP for homeowners regardless of the loan-to-value ratio of their current loan held or owned by the government-sponsored enterprises.

Homeowners would have to be current on their mortgages in order to qualify for the bill, which would:

Eliminate appraisal costs for all borrowers.
Borrowers who live in communities without a substantial number of recent home sales often have been prevented from using the Automated Valuation Models typically used by the GSEs and therefore have to pay for a manual appraisal to refinance. The proposed bill would require the GSEs to develop additional streamlined alternatives to manual appraisals, Mortgage News Daily reported.

Remove barriers to competition.
The bill proposes to eliminate the different standards that exist for lenders currently servicing a loan than for new lenders, and calls for stricter underwriting criteria and greater risks from the GSEs’ reps and warranties. The legislation would direct the GSEs to require equalizing the underwriting and associated reps and warranties between existing and new lenders so borrowers would get more competitive pricing and more favorable loans terms.

Guarantee access to streamlined refinancing for all GSE borrowers.
The bill would allow lenders to offer a single, streamlined program to all GSE borrowers rather than continuing to distinguish between borrowers with LTVs above 80 percent and those below. Borrowers with greater equity have endured greater costs and administrative burdens that basically have locked them out of HARP, Mortgage News Daily reported.

Eliminate upfront fees on refinancings.
Enhancements to HARP earlier this year lowered or completely eliminated some fees for HARP loans, creating what the sponsors called an economically indefensible situation where borrowers with significant equity have faced steeper costs for refinancing than borrowers with no equity, Mortgage News Daily reported. These additional fees can be as high as 2 percent of the loan amount. The bill would prohibit the GSEs from charging upfront fees to refinance any loan they already guarantee.

Streamline the refinancing application process.
The bill proposes the elimination of employment and income verification requirements. According to Mortgage News Daily, the sponsors felt there’s no reason to require proof of employment or income for such loans since participation in HARP already requires borrowers to be current and have a history of timely payments, and the GSEs already own the risk.

“Passing this bill will get rid of the red tape that leaves millions of borrowers trapped in higher interest loans, puts money back into the pockets of middle class families, and strengthens our economy,” Menendez said, Mortgage News Daily reported.