Overview and Eligibility of the Home Affordable Refinance Program – HARP

Home Affordable Refinance Program - HARP

Home Affordable Refinance Program – HARP was established in 2009 to assist homeowners that are unable to access a refinance due to a decline in their home value.  The program started on April 1, 20019 and is designed to provide borrowers with an opportunity to refinance by permitting the transfer of existing mortgage insurance to their newly refinanced loan.

HARP also allows those without mortgage insurance on their previous loan to refinance without obtaining new coverage.  In order to increase access to the program for responsible buyers, HARP enhancement took effect in 2012.  Its original expiration was December 31, 2013, but was extended until December 31, 2018.

Home Affordable Refinance Program – HARP Eligibility

Here are the basic HARP eligibility criteria for the Home Affordable Refinance Program – HARP:

  • The current loan must be under the ownership or guarantee of either Fannie Mae or Freddie Mac.
  • Loan origination must be on or before May 31, 2009.
  • Current loan‐to‐value ratio ‐‐ LTV‐‐ (outstanding mortgage balance/home value) must be greater than 80 percent. There is no LTV ceiling.
  • The borrower must be current on their mortgage payments at the time of the refinance.
  • Payment history – borrower is allowed one late payment in the past 12 months,  as long as it did not occur in the 6 months prior to the refinance.

Here are additional requirements which you need to know if you want to refinance through the Home Affordable Refinance Program – HARP:

  • Must have a remaining balance of $50,000 or more on their mortgage
  • Remaining term on their loan of greater than 10 years
  • have a mortgage interest rate at least 1.5 percent higher than current market rates.
Home Affordable Refinance Program – HARP 2017 Statistics

From inception through September 2017, 2,906,274 loans refinanced through HARP were for primary residences, 110,372 were for second homes a
nd 461,071 were for investment properties.  In September 2017, 6 percent of the loans refinanced through HARP had a loan‐to‐value ratio greater than 125 percent.

Year to date through September 2017, borrowers with loan‐to‐value ratios greater than 105 percent accounted for 19 percent of the volume of HARP loans. The proportion of HARP refinances for underwater borrowers (LTV greater than 105 percent) refinancing to shorter-term mortgages accounted for 26 percent.  Shorter-term 15‐ and 20‐year mortgages build equity faster than traditional 30‐year mortgages.

Why refinance through the Home Affordable Refinance Program – HARP?

Home Affordable Refinance Program - HARP

Many homeowners could save a lot by refinancing through HARP.  According to an FHFA report, about 118,705 borrowers could benefit financially from the program as of June 30, 2017.  An estimated $191 in savings per month per borrower is possible through the program.  Sixty percent of eligible borrowers reside in Illinois, Puerto Rico, Florida, Michigan, Ohio, New Jersey, Pennsylvania, Georgia, Maryland, or Alabama.

Home Mortgage Alliance Corporation – HMAC (NMLS ID #1165808) offers assistance to branches, brokers, and originators to access HARP.  Through the HMAC partnership process, brokers and branches would be owners of their own direct lending division and HARP is one of the key loan programs which they can offer.

For more details on the partnership, you can click here.

Reference: Federal Housing Finance Agency (FHFA)

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