The Home Affordable Refinance Program (HARP) is a federal program that was introduced in 2009 to help homeowners who were struggling to refinance their mortgages due to negative equity (when the value of the home is less than the amount owed on the mortgage). harp mortgages allows homeowners to refinance their mortgages at a lower interest rate, even if they have little or no home equity. This can help homeowners save money on their monthly mortgage payments and make their homes more affordable. HARP is available to homeowners with a mortgage owned or guaranteed by Fannie Mae or Freddie Mac and who have not missed any mortgage payments in the past six months. The program was set to expire in December 2018, but it was extended through December 2020 and has now been extended again through December 2023.
What Was Harp, And How Did It Work?
HARP was a refinance program created by the Federal Housing Finance Agency (FHFA) and implemented by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that purchase and securitize mortgages. The program was designed to help homeowners underwater on their mortgages, meaning they owed more on their loans than their homes were worth. It was also intended to help homeowners with less-than-perfect credit or who did not have enough home equity to qualify for a traditional refinance.
Under harp program mortgages, homeowners could refinance their mortgages even if they owed up to 125% of the value of their homes. This was a significant departure from traditional refinance programs, which typically required homeowners to have at least 20% home equity. HARP was also more lenient concerning credit scores and income verification, making it easier for homeowners with less-than-perfect credit or who were self-employed to qualify.
To participate in HARP, homeowners had to meet the following eligibility requirements:
- The mortgage had to be owned or guaranteed by Fannie Mae or Freddie Mac.
- The mortgage had to have originated on or before May 31, 2009.
- There could be no missed payments inside the previous six months but no more than one missed fee in the previous twelve months for the homeowner to qualify as being current on their mortgage.
- The homeowner had to demonstrate a willingness and ability to make their monthly mortgage payments.
If a homeowner meets these requirements, they could apply for a HARP refinance through any lender participating in the program. The lender would then review the homeowner's application and, if approved, provide them with a new mortgage at a lower interest rate.
What Was The Impact Of Harp On Homeowners?
HARP was a hugely successful program that helped millions of homeowners refinance their mortgages and lower their monthly payments. According to the FHFA, harp program for mortgages resulted in the refinancing of more than 3.4 million mortgages, saving homeowners an average of $2,400 per year on their mortgage payments.
The program was beneficial for homeowners who were underwater on their mortgages, as it allowed them to refinance into more affordable loans and avoid default or foreclosure. It was also helpful for homeowners with less-than-perfect credit, as it allowed them to refinance their mortgages and improve their credit scores over time.
Why Did Harp Expire?
HARP was initially set to expire in 2013, but the FHFA extended it several times due to the continued need for the program and its effectiveness in helping homeowners. The program ultimately passed on December 31, 2018, after having been in place for nearly a decade. There are a few reasons why HARP was allowed to expire. One reason was that the housing market had largely recovered from the financial crisis, and the need for the program was no longer as great as it had been in the past. Additionally, the FHFA has introduced several other programs to help homeowners refinance their mortgages, including the Enhanced Relief Refinance (ERR) program and the High LTV Refinance Option (HLRO). These programs
Conclusion
The Home Affordable Refinance Program (HARP) is a valuable option for homeowners struggling to refinance their mortgages due to negative equity. By allowing homeowners to refinance their mortgages at a lower interest rate, even if they have little or no home equity, HARP can help them save money on their monthly mortgage payments and make their homes more affordable. HARP is available to homeowners with mortgages owned or guaranteed by Fannie Mae or Freddie Mac and has been extended through December 2023. If you are a homeowner struggling to refinance your mortgage due to negative equity, you may want to consider applying for HARP. It is essential to carefully review the program's terms and conditions and consult with a financial professional to determine if HARP is right for you.
