Borrowers whose loans are backed by Fannie Mae and Freddie Mac may see expanded opportunities to refinance, but borrowers with nonagency loans won't be so lucky, Compass Point Research & Trading said.
One of the most significant changes on the mortgage refinancing landscape could be an expansion of the Home Affordable Refinance Program through 2014 from its current deadline of December 2013, Compass Point said. But nonagency borrowers won't see the same opportunities.
"Efforts to expand refinancing opportunities for nonagency borrowers are unlikely to be implemented due to structural concerns such as limits on action due to pooling-and-servicing agreements or the use of the FHA as the refinancing vehicle," the report said.
Under HARP administration, the director of the Federal Housing Finance Agency has “enormous latitude” with the program structure.
Because FHFA Acting Director Ed DeMarco is content with HARP 2.0 progress, change is unlikely under his leadership. But DeMarco might be replaced next year, which could portend an expanded HARP.
With more than 700,000 HARP refis in 2012 and a current monthly pace of about 100,000 refinancings, data through December is projected to cross 1 million for HARP 2.0.
Compass Point recently said a qualified nominee to succeed DeMarco is Ginnie Mae President Ted Tozer — a more than likely candidate that would push the current HARP deadline beyond its current expiration date.
The Boxer-Menendez bill, which would take steps to incentivize cross-servicer refinancing through HARP, is also expected reach passage by the first quarter of 2013, Compass Point said.
"While passage of this legislation would likely result in increased refinancing completion, which in turn could impact gain-on-sale margins, the removal of the expanded eligibility date limits the bill’s potential impact. Ultimately, we believe that the greatest likelihood for mortgage refinancing policy changes remain centered on GSE-backed mortgages rather than nonagency loans," the report said.