HARP Mortgage Refinance to Help Underwater Homeowners

By Franklin Rhodes • November 8th, 2011

The Home Affordable Refinance Program was a bold mortgage relief initiative released in 2009 in an effort to bridge the gap for underwater homeowners looking to refinance into a more affordable mortgage. The government created this program with the intention of helping struggling homeowners find a measure to refinance into mortgage refinance rates that had fallen to all-time lows.  It seemed logical to extend home refinancing to borrowers that were struggling because of bad credit or not enough equity. Since traditional lending no longer offered risky loan programs, most people believed that the mortgage from HARP would help millions of homeowners because it enabled underwater borrowers to refinance up to 125% loan to value.  Homeowners used to be able to exceed the value of their home with an equity loan, but now the “Home Affordable Refinance” is the only refinance program that actually targets underwater refinancing. Unfortunately not enough lenders participated and too many homeowners were so deeply underwater that a 125% loan was not good enough because their property values had fallen so far.  But now with “loan to value” restrictions removed from the guidelines, we anticipate that more and more HARP lenders will be offering the “Home Affordable Refinance.”

The enhancements will allow some homeowners who are not currently eligible to refinance to do so under HARP. The changes reduce costs for borrowers who want to refinance into a more affordable home loan. The HARP mortgage program also eliminate the cap that restricted borrowers who owed more than 125% of what their house is worth from utilizing this government mortgage aid program.

HARP Mortgage Refinance Eligibility – To be eligible, you must meet the following criteria below:

  • Your home loan owned or guaranteed by Freddie Mac or Fannie Mae, sold to those agencies on or before May 31, 2009.
  • The current LTV ratio on the 1st home loan must be greater than 80%.
  • You may not have already completed a HARP refinance
  • You must have a flawless payment history on your mortgage in the past six months and can only have been late once on your home loan payment in the last year.
  • Check out Freddie Mac’s Refi Relief Fact-sheet

How do I take advantage of HARP? According to the FHFA, the first thing homeowners should do is verify that their home loans are owned by Freddie Mac or Fannie Ma.  If your mortgage servicing company acknowledges your connection with Fannie or Freddie, you should contact a HARP lender like Nationwide that offer the Home Affordable Refinance Program.

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