The HARP (Home Affordable Refiance Program) will be revamped soon, government officials say. A lot more homeowners will be eligible for the program. Here’s what you need to know about the changes.
About HARP
The Home Affordable Refinance Program (HARP) is a government mortgage program, first introduced in 2009 as a means to help underwater homeowners.
HARP allows “underwater” homeowners to refinance their respective homes.
HARP is also for non-underwater homeowners who have been hit by falling home prices. HARP is for mortgages secured by Fannie Mae and Freddie Mac only. Along with FHA mortgage, jumbo mortgage and USDA loans are excluded, too.
The Government Improves Upon The HARP Program
When HARP was first launched in 2009, the government said that the program would help millions of otherwise-ineligible U.S. households to obtain a refinance of their mortgage. At the time, rates were falling and homeowners were eager to lock in savings. Unfortunately, the government’s estimates fell short. In the last two years, 838,000 homeowners have used the HARP program. As a result, HARP has been accused of missing the mark.
On October 24, 2011, there was a major announcement made about changes to the HARP program. The biggest change is that some homeowners who are significantly underwater (over 125% loan to value) can now qualify for the program.
Here are some answers to commonly asked questions about the new revamped HARP program (HARP 2.0):
What Is HARP?
HARP was started in April 2009. The government calls it Home Affordable Refinance Program.
In order to be eligible for the HARP refinance program:
- Fannie Mae or Freddie Mac must back your loan.
- Your current mortgage must have a securitization date prior to June 1, 2009.
If you meet these two criteria, you may be HARP-eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-eligible.
How do I know if Fannie Mae or Freddie Mac has my mortgage? Contact the agents at Broadpoint Properties and we can help you to determine whether Fannie Mae or Freddie Mac has your mortgage. You can also use lookup tools on the Fannie Mae and Freddie Mac websites.
If Fannie Mae or Freddie Mac holds my mortgage, am I automatically eligible for the Home Affordable Refinance Program? No. There are a number of criteria. Having your mortgage held by Fannie or Freddie is just the beginning.
What if neither Fannie Mae nor Freddie Mac has a record of my mortgage? If neither Fannie nor Freddie has record of your mortgage, you are not eligible for this refinance program.
Am I eligible for the Home Affordable Refinance Program if I’m behind on my mortgage? No. You must be current on your mortgage to refinance through this program.
Will the Home Affordable Refinance Program help me avoid foreclosure? No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It’s meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today’s low mortgage rates.
What are the minimum requirements to be eligible for HARP? First, your home loan must have been paid on time for the last 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. Lastly, you may not have used the HARP program before: only one HARP refinance per mortgage is allowed.
Is there a loan-to-value restriction for HARP? No, there is no loan-to-value restriction. All homes (regardless of equity) are eligible for the HARP program—just as long as the borrower and the loan meet all of the other criteria.
Do I have to HARP refinance with my current mortgage lender? No. You can do a HARP refinance with any participating mortgage lender.
What’s the biggest mortgage I can get with a HARP refinance? HARP refinances are limited to your area’s conforming loan limits. In most cities, the conforming loan limit is $417,000. However, in San Diego County, the current confirming loan limit for a single-family home is $546,250.
I am unemployed and without income. Am I eligible for HARP? No. Income verification is required for the HARP refinance program.
Is there a minimum credit score to use the HARP program? No. There is no minimum credit score requirement with the HARP refinance program. However, you must qualify for the mortgage based on traditional underwriting standards.
While this program will open up opportunities for responsible borrowers who are significantly underwater, it is definitely not a salvation for most of those sellers participating in short sales. So, before you get super excited about your refinance, make sure that you qualify for HARP 2.0.
Photo: flickr creative commons by Pablo Manriquez
{ 2 comments… read them below or add one }
I think the new revamped HARP program is going to help a lot of homeowners in our region of the Inland Empire. The main reason is that lenders, in theory, will be more willing to refinance a borrower who’s home is upside down in value due to less risk of Fannie or Freddie forcing a buy back. I think the bigger question now will be should they refinance or should they short sale? And will interest rates stay low enough for there to be any benefit to the home owner.
Brad, I agree with you. But the key is that (as you know better than me) these must be responsible borrowers–folks with no late payments for 11 of the last 12 months. So, unfortunately, that will rule out quite a few folks.
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