The Home Affordable Refinance Program

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A part of the federal Making Home Affordable program, the Home Affordable Refinance Program, or HARP, is aimed at helping homeowners to avoid foreclosure and save their homes. The program is available as a refinancing option under the government’s initiative. Loans that are current and that are either owned or guaranteed by Fannie Mae or Freddie Mac may be eligible for HARP even if the homes have dropped in value. HARP may allow borrowers to secure mortgages with reduced interest rates, lower payments, fixed-rate interest rates or shorter mortgage terms.

The History of HARP

HARP was created with a goal to change millions of Freddie Mac and Fannie Mae mortgages into 15- or 30-year low-interest, fixed-rate loans. In some cases, payments under the refinanced loans increased if the homeowner could afford them. The benefit to homeowners was that the payment amounts were stable over the long term, meaning that the interest rate would not be reset. This program was only available to Freddie Mac– and Fannie Mae-backed mortgages, which make up about 50 percent of the mortgage loans in the United States.

While the goal of HARP was to decrease the default rate for mortgages while stabilizing the prices of homes, it fell short of the expectations. While up to 5 million homeowners were supposed to be helped by HARP, only 900,000 were able to successfully refinance their mortgages through it. In 2011, the federal government responded by changing HARP to make the eligibility requirements easier to meet in order to assist more borrowers.

HARP Eligibility

In order to qualify for refinancing through HARP, people must meet the following requirements:

● The mortgage must be guaranteed or owned by either Freddie Mac or Fannie Mae
● The loan must have been sold to Freddie Mac or Fannie Mae on or before May 31, 2009
● Except for Fannie Mae loans that were refinanced through HARP between March and May of 2009, all others must not have previously been refinanced through HARP.
● The loan-to-value ratio must be 80 percent or higher.
● The mortgage must be current
● People cannot have been more than 30 days late on their payments in the past 6 months
● Borrowers may not have been 30 days late more than once in the past year
● The home must be the borrower’s primary residence, a second home with one unit or an investment property with between one and four units.

Potential Changes To HARP

It is possible that the government may further modify HARP to allow mortgages that are not guaranteed by Freddie Mac or Fannie Mae to be refinanced. Today, most loans are either guaranteed or owned by one of the two, but that was not the case between 2001 and 2007.

When HARP Will Expire

HARP is scheduled to expire after Dec. 31, 2016. People who want to learn more about the program and their possible eligibility for it may schedule their free appointments by calling 1-866-96-GMLAW.