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What Is a HARP Mortgage Loan
Can you tell me what is a HARP mortgage loan? How Did HARP LOAN WORK? HARP Replacement Program. Is the government HARP Mortgage Program Real? Is the HARP Mortgage Loan Still Available?
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2 Replies
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Thanks for asking this question, Randy. I remember when I was first studying for my NMLS exam and preparing to get my mortgage license in January 2012, HARP mortgage loan programs was a huge thing. It was a government loan program to help homeowners with upside down mortgages to be able to refinance their conventional loans. However, the conventional loan had to be owned by Fannie Mae or Freddie Mac in order for homeowners to be eligible for a HARP Refinance Loan. It was streamlined where no appraisal was needed and no income verification. You just needed timely mortgage payments in the past 12 months. Homeowners were allowed on late payment on their mortgage loan in the past 12 months.
In this post, I will address What is a HARP Mortgage Loan and how a HARP refinance mortgage loan worked.
HARP was a federal program called the Home Affordable Refinance Program. The Federal Housing Finance Agency set it up in March 2009. This scheme aimed to support homeowners with underwater mortgages – people who owed more on their home loan than what the property was worth, also known as negative equity – who were still making payments and wanted to swap out their current mortgage for a lower interest rate.
Does that mean you must be behind on your payments to get help through HARP? No! Remember, this plan was implemented for those who remained financially responsible despite losing so much equity during the housing crisis; it’s meant as an opportunity rather than relief.
How Did the HARP Loan Work?
Eligibility For HARP Mortgage Program:
- Fannie Mae or Freddie Mac must own or guarantee your mortgage.
- The loan must have been sold to Fannie Mae or Freddie Mac before May 31st, 2009.
- Current mortgage payments in the last six months.
- Homeowners could not have more than one late payment in the last 12 months.
A loan-to-value ratio greater than 80%.
Benefits of HARP Mortgage Loan:
- Lowering interest rates.
- Reducing monthly payments.
- Converting ARM into a fixed-rate mortgage.
- Sometimes, it requires something other than a new property appraisal.
HARP Mortgage Loan Process:
- Homeowners applied through their existing mortgage servicer or other participating lenders.
- The lender reviewed the homeowner’s application and financials.
- Refinancing is similar to standard refinance but often with reduced documentation requirements and fees.
HARP Replacement Programs: Because HARP ended at the close of 2018, two new options emerged aimed at underwater borrowers.
Fannie Mae’s High LTV Refinance Option:
- They are designed for homeowners with Fannie loans having higher than normal LTV ratios.
- Intended to reach borrowers unable to achieve traditional refinances due to lack of equity.
Freddie Mac Enhanced Relief Refinance (FMERR):
- Similar to Fannie’s offering but applies to Freddie mortgages.
- Offers alternative refinancing for high-LTV borrowers seeking lower rates and streamlined costs.
Is the Government HARP Mortgage Program Real?
Yes, this was a genuine federal program that operated between 2009 – 2018. Created in response to the housing crisis, it allowed millions of underwater homeowners to refinance their mortgages through government support even though they were upside down on their loans.
Is the HARP Mortgage Loan Still Available?
No, it expired at year’s end. However, those eligible could find relief with Fannie Mae’s High LTV Refinance Option and Freddie Mac’s Enhanced Relief Refinance, which are its replacements. These programs still allow homeowners who don’t have much equity because of high LTV ratios (loan-to-value) to benefit from refinances featuring lower interest rates and reduced monthly payments.