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Home Affordable Refinance Program: Helping the Under-Water Homeowner

Article by Bret Pippen

The Home Affordable Refinance Program also referred to as “HARP,” helps homeowners refinance their mortgage who otherwise might not qualify. If you’re current on your mortgage payments, but your home’s value has fallen to a point you owe more than your home is worth, this program may help.

Current market conditions have slammed home values especially hard. And, many responsible homeowners have been unable to get traditional refinancing. HARP is designed to help by providing eligible homeowners with more affordable, stable mortgages.

The Home Affordable Refinance Program is part of the federal government’s “Making Home Affordable” initiative. According to President Obama, the goal of HARP is “to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.”

By refinancing, responsible homeowners may improve their financial positioning. The Home Affordable Refinance Program can help reduce your monthly principal and interest payments. Or, you may be able to move from a riskier loan, like an interest-only or short-term adjustable rate mortgage (ARM) into a more stable, fixed-rate loan.

Recent Home Affordable Refinance Program Enhancements

This past October 2011, Freddie Mac and Fannie Mae made changes to the Home Affordable Refinance Program. Basically, the enhancements make it easier for lenders to refinance the mortgages of eligible borrowers.

Current eligibility qualifications include the following:

Your mortgage must be owned or guaranteed by either Freddie Mac or Fannie Mae. To determine if your mortgage is owned by either of these Government-Sponsored Enterprises (GSE), you can visit their websitesand use their loan lookup tool, or call their toll free numbers.

If you determine Freddie or Fannie own your mortgage, you need to make sure it was sold to either GSE on or before May 31, 2009. In addition, your mortgage must not have been previously refinanced under the Home Affordable Refinance Program. The exception to this rule involves Fannie Mae loans refinanced under HARP between March and May 2009.

Loan-to-Value Ratios (LTV). Your current LTV must be more than 80 percent. The recent enhancements have expanded the maximum Loan-to-Value ratios borrowers must meet.

Payment Status and History. When you apply for a refinance under the Home Affordable Refinance Program, you must be current on your mortgage payments. In addition, you cannot have had any late payments in the six months prior to your application. And, you can have no more than one late payment in the previous seven to 12 months.

For complete details on the Home Affordable Refinance Program details, you should contact your mortgage servicer or another lender approved by Fannie Mae or Freddie Mac. You should also know you do not have to refinance with your current servicer. You are free to work with any mortgage lender as long as they participate in HARP. Not all servicers participate in the Home Affordable Refinance Program.

Finally, HARP loans require a loan application and underwriting process. And, you will incur refinance fees. So, even though you’re taking advantage of HARP, it’s important to compare rates and costs among different mortgage lenders to make sure you get the best terms.


Bret Pippen is a contributing editor and is the head of advertising and customer communications for Regions Bank, one of the nation’s largest full-service providers of consumer and commercial banking products and services. Learn more about the Home Affordable Refinance Program by visiting our website.


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