The federal government's Home Affordable Refinance Program isproviding at least one credit union with an avenue to make newmortgage loans.

The 126,000-member TowerFederal Credit Union in Laurel, Md., has handled $70 million inHARP loan applications since March, 70% of them coming from memberswho had loans with other lenders.

“The intention of HARP was to help people who are current ontheir mortgage payments but do not qualify for a traditionalrefinance – due to a significant loss in their home's value or whohave little or no equity – to refinance and take advantage of lowerinterest rates,” said Barry Stricklin, Tower's vice president ofreal estate lending.

Borrowers may be eligible for HARP if their loan was sold toFannie Mae or Freddie Mac before June 1, 2009.

Stricklin explained that the $2.5 billion credit union feltparticularly proud of its effort with the latest version of HARP,dubbed HARP 2.0, because the first HARP program had been so poorlydesigned it had not helped many borrowers.

Under the rules of the first HARP program, a credit union wouldsubmit loan information for underwriting by Fannie Mae and, only ifit passed that first hurdle, could it be refinanced.

In addition, the first HARP program's loan-to-value parametersfor eligible loans were so narrowly drawn they effectively left toomany borrowers out, Stricklin explained.

Unlike that program, however, HARP 2.0 eliminated theloan-to-value rules entirely and significantly relaxed Fannie Mae'sunderwriting rules, Stricklin said, often to the point where aborrower whose loan had been rejected for a HARP refinance a fewmonths before could now be resubmitted and found toqualify.

“Often it was like night and day,” Stricklin said. “It was thatdramatic.”

But as good as it was for borrowers, Stricklin explained thatthe changed program left the CU with a challenge.

Tower was afraid so many other members had heard that HARP couldnot help them or had even tried to apply under the first programand failed, that they would not understand that the HARP 2.0 was asignificantly different program.

“By keeping the same name, we were worried that some membersmight miss the opportunity to apply,” Stricklin said.

So Tower began a detailed analysis of its member's loanhistories, identifying those which had the sorts of mortgage loanswhich would likely qualify based on what the credit union knewabout surrounding real estate values, and then sending letters tothose members.

“We didn't tell members to apply,” Stricklin said. “All wedid was explain the new HARP program and then invite them to callus and see if they might qualify.”

Tower also didn't restrict the effort to only members with loansthey originated with the credit union, Stricklin recounted. Memberswith loans they had received from another institution got the sameletter, only with an additional sentence advising the members thateven though they had gotten their loans from somewhere else, thecredit union was still able to help them.

The results have been outstanding, Stricklin reported, with manymembers relating how they tried to get a HARP refinance from otherinstitutions only to face additional fees and loan-to-value caps(even though HARP 2.0 does not set any) and long delays as thelarger banks tried to cope with the strong volume.

“In the end we decided why not try to recapture some of thatbusiness,” Stricklin said, adding that the credit union saw theopportunity to help its members refinance their loans as a chanceto both originate more mortgage loans as well as positively impactthe lives of its members.