HARP Mortgage Refinancing Program Extended Two Years

The government’s Home Affordable Refinance Program (HARP) will continue through December 31, 2015, according to the Treasury Department. Previously the program was scheduled to shut down at the end of this year.

Started in 2009 by the Obama administration, HARP is designed to help borrowers refinance to new and lower interest rates. So far, as of March 2013, the government reports that more than 1.1 million homeowners have received a permanent modification through HARP, with a median savings of $546 every month – or 38 percent of their previous payment.

The purpose of the HARP program is to help borrowers who are making their payments but cannot refinance because local home values have dropped and they have insufficient equity to refinance with a private lender. However, since they have been making their payments, the government considers such underwater borrowers good credit risks and will help them through HARP.

“The housing market is gaining steam, but many homeowners are still struggling,” said Treasury Secretary Jacob J. Lew. “Helping responsible homeowners avoid foreclosure is part of our wide-ranging efforts to strengthen the middle class, and Making Home Affordable offers homeowners some of the deepest and most dependable assistance available to prevent foreclosure. Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry.”

HARP is part of the federal Making Home Affordable program. Under HARP borrowers can qualify for new financing if:

  • The mortgage is owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage has been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage was not refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

Notice the last requirement. Distressed borrowers seeking to refinance are sometimes advised to skip a payment to pressure the loan servicer into a mortgage modification. Wrong. By failing to make a payment the borrower will face a credit ding and not qualify for a HARP refinance for at least a year.

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