Although many credit unions may not have realized it, the second version of the federal government's Home Affordable Refinance Program is a more workable and beneficial for both borrowers and credit unions than its predecessor, according to housing finance executives at credit unions that have begun making the loans.

Rolled out in 2010, the first version of HARP soon gained a reputation for significantly burdensome paperwork and a loan-to-value cap of 125%, which left far too many borrowers unable to participate. Further, if  homeowners fell beneath the LTV cap, they would often founder on the HARP's underwriting guidelines, which were set by Fannie Mae. That further weeded out potential participants.

With those restraints, many credit unions reported opting out of the program, preferring to do, they said, better by their members in need of mortgage loan assistance than they could through the program.