- The Home Affordable Refinance Program (HARP) helps homeowners with little equity to refinance their mortgages.
- HARP comes with a host of requirements homeowners must meet to qualify.
- The program is set to end in December 2018
- Former President Barack Obama proposed HARP 3.0, but silence so far.
One way to address an underwater mortgage is by refinancing it through the Home Affordable Refinance Program (HARP). The program has gone through many changes over the years, and many people have been looking forward to a third iteration of the program, dubbed HARP 3.0, that hopefully will expand eligibility for the program to more homeowners.
What is HARP?
HARP is a federal program designed to help people who have little equity in their home, or whose mortgages are underwater, to refinance their loans, which they wouldn’t otherwise be able to do.
HARP targets borrowers with a loan-to-value (LTV) ratio equal to or greater than 80 percent, and with limited delinquencies over the 12 months before seeking refinancing. It can help homeowners reduce their monthly payments. HARP is a voluntary program, however, meaning lenders aren’t required to offer it. Be sure to compare lenders and their options first.
HARP doesn’t require a borrower to purchase mortgage insurance. There are, however, basic qualifications a homeowner must meet to be considered for a HARP refinance:
- You must be current on your mortgage. That means that in the last six months, you must not have been more than 30 days late making a payment. Additionally, you must have had no more than one such late payment in the past year.
- The home you are refinancing must be your primary residence, a one-unit second home, or a one- to four-unit investment property.
- Your mortgage must be owned by Freddie Mac or Fannie Mae.
- Your loan must have been originated on or before May 31, 2009.
- Your LTV ratio must be more than 80 percent.
When Will HARP 3.0 Be Available?
Former President Barack Obama’s administration introduced HARP in March 2009 after the fallout of the housing crisis, to provide relief to homeowners who had very little equity in their homes and who were unable to refinance their homes to take advantage of historically low interest rates. The HARP mortgage program was tweaked in 2011 to expand the number of homeowners who were eligible to participate. That iteration of the program became known as “HARP 2.0.”
HARP 2.0 eliminated a requirement limiting LTV to 125 percent, and removed a lender liability clause that had made some lenders hesitant to participate.
In 2012, Obama announced proposed changes to HARP, which became known as “HARP 3.0,” though the changes have not been implemented, and may never be implemented. One of the changes people hoped HARP 3.0 would bring was ending the requirement that eligible loans be serviced by Fannie and Freddie, opening up the program to all loans.
In August 2016, the Federal Housing Finance Agency (FHFA) announced it would renew HARP in its current form through September 2017. In August 2017, FHFA announced it would extend the program again, through Dec. 31, 2018. FHFA also announced that the new, streamlined program, which it had previously announced but provided few details on, will be open to mortgages originated on or after Oct. 1, 2017.