The Home Affordable Refinance Program (HARP) was created by the Federal Housing Finance Agency in March 2009 to allow those with a loan-to-value ratio exceeding 80% to refinance without paying for mortgage insurance. Originally, only those with an LTV of 105% could qualify. Later that same year, the program was expanded to include those with an LTV up to 125%. This meant that if someone owed $125,000 on a property that is currently worth $100,000, they would still be able to refinance and lock in a lower interest rate.
In December 2011, the rule was altered once again to state there would be no limit on negative equity for mortgages up to 30 years and now individuals owing more than 125% of their home value could refinance without PMI.
Certain criteria must be met to qualify for HARP. While there may be additional criteria imposed by the mortgage servicer, the government requirements are as follows:
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Many homeowners are unaware that their mortgages are linked to one of these organizations, since neither Freddie Mac nor Fannie Mae deals directly with the public.
- The mortgage must have been completed on or before May 31, 2009.
- The homeowner must not have a previous HARP refinance of the mortgage, unless it is a Fannie Mae loan that was refinanced under HARP during March-May 2009.
- The homeowner must be current on their mortgage payments, with no (30-day) late payments in the last six months and no more than one late payment in the last twelve months.
- The current loan-to-value ratio (LTV) of the property must be greater than 80%.
- The homeowner must benefit from the loan by either lower monthly payments or movement to a more stable product (such as going from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage).
Another feature of HARP is that applicants can forgo a home appraisal if a reliable automated valuation model is available in the area. This can save the borrower time and money, but is subject to the discretion of the mortgage servicer.
This is a program that is on the way out. Most of the people who would have been eligible for this refinance option have already taken advantage of it, or it has passed them by as being a viable option. The only reason I am giving it any time now, is if someone is quoting you are Harp loan for your refinance, please call another lender (me –hint, hint) for a second opinion. These were great loans in the beginning when most Californians were upside down on their Loan to Value of their home, but now, in most cases, that equity has come back, making the Harp choice not viable or recommended. You might be one of the few who can and must use this program for relief, but I doubt it. The interest rate is higher than what you will receive on a conventional refinance.
So, if you still have questions about this, Call Michael Mitchell, 530-406-2200 or 707-259-1117 or 707-337-5970 mobile.