HARP, the Home Affordable Refinance Program for low-equity and underwater homeowners is getting a new lease on life, with an extension through September 2017, the Federal Housing and Finance Agency (FHFA) announced today.
Not only that but the FHFA also announced the development of a new, permanent mortgage refinance program to take the place of HARP and that will serve largely the same type of borrowers, those with high loan-to-value (LTV) mortgages.
As with HARP, the new program will be administered through Fannie Mae and Freddie Mac and will be limited to borrowers whose mortgages are backed by one of those two enterprises.
"Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the Enterprises," said Melvin L. Watt, FHFA director. "This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac."
It's estimated there are still some 300,000 homeowners who are eligible to refinance through HARP to a new mortgage with a lower interest rate, but who still have not done so. The program, which has been extended several times, was scheduled to expire at the end of 2016 but today's announcement keeps it going another 10 months.
New program to begin in Fall 2017
The extension is intended to cover the transition to the new refinance program, which is scheduled to begin in October 2017.
The new program is described as a streamlined refinance for high LTV borrowers, with similar eligibility guidelines to HARP. Initial eligibility standards announced today are:
- No missed any mortgage payments in the past six months
- No more than one missed payment in the past 12 months
- Borrowers must have a source of income
- Borrowers must realize a benefit from refinancing, such as a lower monthly payment or paying their loan off more quickly.
Fannie Mae and Freddie Mac will not require that borrowers be subject to a minimum credit score, will have no maximum debt-to-income ratio and may not require a property appraisal. However, individual mortgage lenders handling the loans may implement their own requirements in these and other areas.
Unlike HARP, there will be no cut-off date for the program and borrowers may use the program more than once to refinance their mortgage. However, it may not be used to refinance a current mortgage obtained through HARP; to be eligible for the new program, they must have refinanced out of HARP into a standard Fannie Mae or Freddie Mac loan product.
Other details of the program will be released over the coming months.
Other options available for FHA, VA homeowners
While FHA, VA and USDA loans are not eligible for the new program, those agencies already have streamlined refinance programs in place for their own mortgages that are available to borrowers who are underwater on their mortgages or have little home equity.
More than 3.4 million homeowners have refinanced their mortgages through HARP since the program was launched in 2009 as part of the Obama Admistration's response to the collapse of the housing market and ensuing economic crisis.
With mortgage rates falling to historic lows and many borrowers locked into high-interest mortgages due to a lack of home equity, the program was seen as a way to allow many of those borrowers to refinance into more affordable home loans, thereby reducing the risk of foreclosure and freeing up billions of dollars that they could spend for other purposes and stimulate the economy.
For information on a HARP refinance
Borrowers seeking more information on HARP refinancing, visit HARP.gov or use the form on the right side of this page to request personalized refinance rate quotes from lenders participating in the HARP program.