Hear ye, HARP® will not end this September! Home Affordable Refinance Program®, which has given relief to underwater borrowers by letting them refinance and avoid foreclosure, has been extended through December 31, 2018.
Plus, changes have been made to Fannie Mae’s and Freddie Mac’s respective High LTV Streamlined Refinance programs as they will replace HARP® in late 2018. Find out how you can qualify for a HARP® refinance here.
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HARP® Extended Through December 2018!
“To ensure that high LTV borrowers who are eligible for HARP continue to have a refinance option, FHFA is also directing the Enterprises to extend HARP through December 31, 2018,” the Federal Housing Finance Agency’s public announcement last August 17, 2017 read.
Hailed as one of the successful federal programs made during the mortgage crisis era, HARP® refinances reached 3.4 million in May 2016.
The program was created in March 2009 to help borrowers whose loan-to-value ratios increased dramatically as a result of plummeting home prices when the housing bubble collapsed.
While these borrowers have been current on their mortgages, the gap between what they owe on their mortgage and what their homes are worth has widened, causing their loan-to-value ratios to increase and their chances at refinancing to decrease.
HARP® has undergone several changes to attract a larger pool of homeowners. For instance, its LTV ratio requirement has been expanded from 105% to 125%. In 2011, this ceiling was scrapped to accommodate those with LTVs exceeding 125%. This was dubbed as HARP® 2.0.
This is not the first time the program has been extended. It was slated to end its run on December 31, 2016, but this deadline has been reset to September 30, 2017. Just last week, it has been extended again through December 31, 2018.
How to Qualify for a HARP® Refinance
Refinancing under HARP® means a streamlined process that is less in cost and paperwork. The program does not generally require an appraisal, along with no credit score requirement and underwriting in order for you to:
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- Get a lower rate that translates to lower monthly payment.
- Get a shorter term that means a faster payoff date and a lower interest cost, overall.
- Get a safer product, i.e. from an adjustable-rate mortgage to a fixed-rate mortgage.
Do you meet the program’s general eligibility requirements?
- LTV: Must be above 80%.
- Home: Owner-occupied, second home, investment property.
- Loan: (i) Must be owned by Fannie Mae (Loan Look-up Tool) or Freddie Mac (Loan Look-up Tool), (ii) originated on or before 31 May 2009, (iii) must be current with no 30+ day late payments allowed within the past six months and only one during the past 12 months.
HARP® to Cover High-LTV Streamlined Refinance for Now
“The changes made to the High LTV Streamlined Refinance program appropriately balance continuing to offer assistance to underwater borrowers with protecting taxpayers,” the FHFA said on the implementation of the high LTV refinance program for underwater borrowers.
HARP®’s extension has been made to cover modifications to the high-LTV streamlined refinance program: Fannie Mae’s High Loan-to-Value Refinance Option and Freddie Mac’s Enhanced Relief Refinance℠.
For now, the FHFA has set October 1, 2017 as the eligibility date for each program. This means that the mortgage must be originated on or after that date to qualify for either GSE’s high LTV refinance. Wells Fargo’s analysis is that the new program will have a limited impact given its eligibility date and LTV threshold of 95% for one-unit primary residences, HousingWire reported.
“From our perspective, the program appears to be geared toward having an efficient refinancing construct in place, should there be another housing downturn,” Wells Fargo analysts was quoted in their report.
As to the effect of HARP®’s extension, it’s a little harder to predict for now said the analysts. The FHFA however expects more than 143,000 homeowners to benefit from the program, as extended.
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Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.
