LOS Helps HARP Initiative

*LOS Helps HARP Initiative*
**By Tony Garritano**

TonyG***In light of the recent announcement by the Federal Housing Finance Agency (FHFA) to extend the Home Affordable Refinance Program (HARP) through 2015 for borrowers of GSE loans, I have learned that one LOS has already stepped up to help lenders and servicers get the most out of this news. Xetus has launched a Subordination Management Platform that enables lenders to transform a traditionally paper-intensive, error-ridden experience into an automated, streamlined, collaborative process. Here’s the scoop:

****Xetus President and CEO Scott Stein says a process that typically takes more than twenty days to perform—from subordination request to subordination approval or decline—now requires fewer than eight days, and as little as two days for an LPS Streamline request. The improvement sets up the opportunity for lenders to create a true profit center amid the refinance boom—driven by a low-interest-rate environment—that has produced a constant need for subordinations.

****“XetusOne’s Subordination Management Platform provides lenders with a private-labeled web page that is integrated directly into their website, taking on the identical branding, look, and feel,” he says. “Its automated capabilities allow parties to collaborate around an electronic folder containing all the information needed—such as the commitment letter, title report, CLTV, line limit, and line balance—to push the request to approval.” Once a requestor enters basic information through the intuitive interface of the web portal, the XetusOne Subordination Management Platform retrieves information from service providers, including an updated FICO and appraisal, and is able to use embedded rules and logic to make an automated recommendation.

****While some experts suggest the refinance rush may be on the wane, which would subsequently stem subordinations, this announcement, along with pending legislation, continues to feed refinance volume. For instance, HARP, first introduced by FHFA and the Department of Treasury in April 2009 and previously set to expire at the end of this year, has contributed to the refinance boom, with more than 2.2 million refinances from the time of the program’s inception through January 2013. The extension of HARP reinforces the web portal’s relevance by extending the program for an additional two years. The FHFA plans on launching a nationwide campaign to inform homeowners about HARP and motivate them to explore and utilize the program. HARP already allows borrowers to refinance underwater loans held by Fannie Mae and Freddie Mac, but a bill introduced earlier this year, the Responsible Homeowner Refinancing Act of 2013, would expand HARP to include all Fannie Mae and Freddie Mac loans, whether underwater or not, and result in as many as 13 million more eligible borrowers

****Cognizant of a mortgage refinance industry in flux, Xetus created the Subordination Management Platform to adjust to various types of incoming subordination requests. The application treats each request uniquely, depending on whether a request is for a VA, FHA, HARP, or other loan. Automatic adjustments also allow the application to handle fees differently, such as applying a fee to a LOC or deducting it from the borrower’s checking account, depending on preference or regulatory compliance. The state of Texas, for instance, does not permit financial institutions to charge borrowers for subordination requests. In cases in which a request cannot be automatically recommended for approval or declined based on specified calculations, the platform marks and delivers the request for an underwriter’s consideration and decision. The XetusOne platform also allows for counter-offers—such as approval with a reduction in the line amount—providing a means for lenders to remove risk from their second lien portfolios during this period of turbulence and uncertainty in the housing market.