Wells Fargo Fails to Not Lend HARP2 Maximums, Limits Loan to Values
Thanks to Rob Christman’s daily mortgage commentary, there comes this word on Wells Fargo and HARP 2.0
….if loan officers think that the pricing, policies, and procedures for HARP 2.0 loans will be a “walk in the park”, they are sadly mistaken.
First, if course, is the pricing. Should/would an investor pay the same price for a 150% LTV 4% loan as they would a 70% LTV 4% loan, everything else being equal? It comes down to investor appetite, which has a direct correlation between who the original investor on a refinanced loan was, and what are the existing reps & warrants – who was servicing the loan?
Which leads to the second complication (servicing) and many lenders saw the confusion on that issue when Wells Fargo’s wholesale and correspondent divisions Friday spent the day revising their announced guidelines.* Many lenders are rolling out the product today, and a good number of the LTV caps based on the differences between refinances done on loans already in a particular servicer’s portfolio and those outside of it. Not only that, but each investor may have different LTV caps based not only on servicing but also the agency (Freddie and Fannie Mae) and on MI company – and not all MI companies will take this product. And each wholesaler will have varying guidelines for their brokers. Sounds like fun.
(*Well Fargo spread the word to both wholesale and correspondent clients that, “The max LTV for Fannie Mae DU Refi Plus loans that are non-Wells Fargo serviced will remain at 105% LTV/110% CLTV. Although it was previously communicated that we would accept non-Wells Fargo serviced loans, this decision has changed.”)
What does this all mean? The whole purpose of the hard work that the White House did to get HARP2 done is not being executed by the lenders. Yes, you can go to 125% with current PMI (although not all PMI companies are agreeing), if you are farther underwater, there may not be an answer for you.
This will result in more people walking away and further foreclosures leading to prices not going up and possibly going down. Tragic.