HARP Mortgage Program
The HARP mortgage program allows homeowners to refinance into low mortgage interest rates even if the property has decreased in value or is upside down. “Upside Down” simply means that you owe more on your home than it is currently worth. The HARP mortgage was established in 2009 by the Government, for homeowners who’s mortgage is backed by either Fannie Mae or Freddie Mac. Even though this is a government mortgage program the actual lending is done by qualified mortgage lenders.
A HARP mortgage refinance addresses situations where the homeowner’s property value has fallen causing them to no longer to qualify under traditional refinancing criteria.
HARP Mortgage Program Overview:
- A HARP refinance only applies to Fannie Mae or Freddie Mac mortgage.
- The homeowner must be able to afford the new lower payment.
- The current mortgage must be up to date with no late payments in the past twelve months.
- Payments on the new loan must be more affordable or more stable than on the existing loan.
- The maximum Loan to Value (LTV) cap has been removed on home owners looking to refinance in to a fixed rate mortgage.
- However for homeowners looking to refinance in to an adjustable rate mortgage the maximum LTV is set at 105%.
If you do not fit the current HARP mortgage criteria:
There is a piece of legislation sitting in Congress that would expand the availability of the HARP mortgage program to non-Fannie/Freddie backed mortgages. Private Equity has also reentered the market with programs like the “Second Chance Refinance” which do not require a government backed mortgage but may require a higher credit score.
There are still 675,000 people in the United Stated that are eligible for a HARP Mortgage. The Federal Housing Finance Agency (FHFA) has unveiled a new interactive map that shows how many homeowners are eligible by state. Florida is at the top of the list with an estimated 82,000 homeowners eligible for a HARP mortgage. Florida has more HARP eligible homeowners than the entire west coast (California 32,000, Oregon 7,000 , Washington 13,000) combined. The top three counties in Florida are Miami 19,000, Tampa 14,000, and Orlando with 9,000.
The Future of the HARP Mortgage Program
Due to the uncertain fate of Fannie Mae and Freddie Mac the HARP program has been stuck in limbo for quite some time now.
The Corker-Warner Housing Finance Reform and Taxpayer Protection Act is the most recent plan to shutdown both Fannie Mae & Freddie Mac within the next five years. They are to be replaced by a central Federal Mortgage Insurance Corporation (FMIC) which is modeled after the current (FDIC).
So where does this leave HARP? Until the fate of Fannie and Freddie has been decided by the powers that be, it is unlikely that HARP will undergo any major changes any time soon. If you do currently qualify for HARP be aware that 2015 deadline is quickly approaching.
There is a lot of speculation as to whether or not HARP 3.0 will come into being? Harp 2.0 has already aided millions of homeowners working hard to pay their loans off. Harp updates are now very much awaited by the American population.
The Harp updates about Harp 3.0 are predicted to be:
- Allow so called Alt A and subprime mortgages into the Harp Program
- Allow multiple Harp mortgage refinances
- Allow more recent mortgages to be eligible
- Removing LTV restrictions
- Increase cooperation between the HARP and mortgage servicers.
These directives will allow many people to take advantage of the program than the previous Harp 2.0 programs. The permission of more than one Harp refinances will allow homeowners to save more than they did before and get improved rates if rates decrease.
Although the Harp 3.0 was thought to be passed in the early onset of the year as analyst said when asked about Harp updates but the economic experts have witnessed more encouraging and growing market either in terms of prices or of increasing prices. Both of these factors indicate that legislation is now more difficult without important changes. However another factor that should be considered is that the number of underwater borrowers will increase and Harp 3 will become a reality. Proved to help a lot people, Harp 3.0 is the future need.
One simple change that can be made to the program is widen the net of availability making it an almost Harp 3.0 program. As stated above, the field of play when Harp 2.0 is the contender is not fair. The new lender’s risk would be brought to the same levels as the original lender’s risk. It is proposed that stricter requirements would be eliminated that would be there in the automated system. These proposals are made thrice although not approved.