The government has recently announced the extension of its Home Affordable Refinance Program, and at the same time relaxed eligibility requirements in order to make the program more accessible to those who need it most.
First established in 2009, HARP was instigated as an option for underwater homeowners wanting to refinance their mortgage at lower interest rates. The original program was touted as the housing market’s ‘shining knight in armor’ when it was first rolled out, with government expectations that it would assist millions of homeowners who found themselves owing more on their mortgages than what their homes were worth.
Till now however, HARP has fallen woefully short of these expectations – prompting the government to relax eligibility requirements in an effort to help more people stave off foreclosure.
Billed as HARP 2.0, the government has extended the program until December 31, 2013 and set out new guidelines for those wishing to apply. One of the biggest criticisms of the original plan was that in order to qualify, homeowner’s loan-to-value ratio was required to be less than 125%, automatically ruling out millions whose home value fell below that figure. This requirement has now been relaxed with HARP 2.0, which stipulates that the property only has to be valued at less than the mortgage in order for homeowners to qualify.
In addition, the original HARP was restricted to the country’s five largest loan servicers – Bank of America, Citigroup, Ally Financial, Wells Fargo and JPMorgan Chase – further limiting the program’s accessibility.
Under HARP 2.0, the program is now available to all mortgage servicers, even in those cases where the mortgage had insurance attached, something that caused big difficulties under the original program. Mortgage insurers are required to sign off on a refinancing deal for any homeowner whose mortgage is insured, and now they are working with lenders to streamline this process, something that should result in many more approvals for HARP 2.0.
Certain rules remain in place for homeowners wishing to refinance through HARP 2.0. As with the original program, HARP refinancing is only available to Fannie Mae and Freddie Mac mortgages. Further, homeowners must be current with their mortgage, with no record of late payments in the last 12 months, and they must be able to show that they can afford the new payments on their home.
Aside from the changes in eligibility for HARP, the government is also making efforts to speed up the approval process, by eliminating the need for an appraisal in many cases.
For more information about HARP 2.0, and to find out if and when you can apply, check the official Home Affordable Remortgage Program website.