The government’s Home Affordable Refinance Program (HARP) was scheduled to expire at the end of April – until last week. The Obama administration’s program to help underwater borrowers, who are current with their mortgage payments, refinance at lower rates was extended an additional two years last week. Regulators announced last Thursday, April 11th, that HARP will now run through 2015, providing additional relief to homeowners.
Here are the requirements borrowers must meet in order to take advantage of the HARP extension:
- Fannie Mae or Freddie Mac must have sold the loan to a borrower no later than May 31, 2009.
- Borrowers who already took advantage of HARP to refinance cannot do so again unless Fannie Mae refinanced their previous HARP loans between March 1st and May 31, 2009.
- Borrowers must owe more than 80% of the current value of the home.
- Borrowers cannot have missed any mortgage payments for the last 6 months and must have a history of on-time payments, with the exception of one late payment by no more than 30 days within the last year.
Although the government and lending institutions are usually at opposite sides of the table when it comes to decision-making about regulatory issues and programs that assist borrowers, the good news about the extension of HARP is that both the government and the industry are on the same page. Fannie Mae and Freddie Mac are ultimately responsible for losses on mortgage defaults, so their risk decreases when borrowers have ways to prevent default and better manage their payments. In this way, everyone is aligned; borrowers, regulators, and lenders are motivated to make refinancing, at today’s relatively low mortgage rate, a reality.
Around 2.2 million homeowners have refinanced using the 4-year-old HARP, and borrower advocates are extremely happy with the extension. Quicken Loans, an online lender, estimates that 2.7 million homeowners are underwater and remain eligible for HARP loans. The online lender also says that the average savings from refinancing through HARP is about $200 per month with a mortgage rate reduction of approximately 1.75%.
If you’re underwater with your mortgage and need to make sense of your options, contact McFarlin LLP. We are here to help!
Timothy McFarlin, McFarlin LLP