HARP Update

Filed under: HARP, Market Comentary

Since it began in 2009, more than 1.7 million households labeled “underwater” have made use of the government’s Home Affordable Refinance Program, also known as HARP, and this program is successfully stimulating the U.S. housing market.

HARP was launched to give homeowners whose homes had lost value access to the same low rates as everyone else. So, during the recession, and with mortgage rates dropping, the government wanted to use HARP as economic stimulus. Homeowners who refinanced through this program had monthly mortgage payments reduced, which helped the homeowner save or spend to meet other financial needs.

Even though the original HARP program failed to gain much traction due to the loan-to-value restrictions, the program was re-written and relaunched in October, 2011, and HARP 2 was meant to expand the reach of the program.

Before HARP 2 came about, the refinance program was reaching fewer than 30,000 households monthly, but since March of 2012, the new HARP 2 has nearly tripled its volume, closing 87,000 loans per month, on average.

Now, Congress is considering launching HARP 3 which would further break down barriers between “underwater” homeowners and today’s low mortgage rates. This will likely allow the refinance of Alt-A and sub-prime mortgages so that homeowners can show strong payment history. The new HARP 3 might also allow for homeowners to re-HARP, a refinance of an existing HARP mortgage.

Currently, the program’s eligibility standards include:

  • The refinanced mortgage must be owned or guaranteed by Fannie Mae of Freddie Mac
  • The refinanced mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009
  • HARP households must also be current on the mortgage to be refinanced, and must have a strong payment history
  • The refinanced mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan refinanced by HARP between March-May of 2009

HARP is expected to reach 1,000,000 loans in 2012, and HARP 3 could help the program get close to its original goal of 7,000,000 overall households in the U.S.

If you think you may be interested or qualify for this type of program, please don’t hesitate to contact me so we can schedule a meeting to see if this program is a good fit for you!


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