The HARP program assisted debtors who had home loan balances that exceeded their property value by enabling them to re-finance their loan– preferably, at a lower rate. Nevertheless, this program ended at the end of 2018.

When rate of interest fall, lots of homeowners will re-finance their mortgage to lock in a lower rate of interest, which can minimize a debtor's month-to-month payment or enable a homeowner to construct equity quicker.

Nevertheless, property owners who typically have problem refinancing are those with unfavorable equity, indicating the home mortgage exceeds the property value, securing the loan as collateral. In the 3rd quarter of 2024, almost one million homes were in unfavorable equity.

In the past, customers with undersea mortgages could take advantage of lower interest rates by refinancing through the Home Affordable Refinance Program (HARP).

Discover the benefits that HARP offered to property owners and offered alternatives for refinancing or modifying a mortgage.

Secret Takeaways

• HARP was a federal government program designed to assist underwater house owners re-finance home loans at more attractive interest rates.The program began on April 1, 2009, and ended on December 31, 2018. By the end of Dec. 2018,
• HARP refinances amounted to 3,494,395 considering that its creation in 2009. A choice for distressed property owners consists of the Flex Adjustment program from Fannie Mae and Freddie Mac. What Is the HARP Loan Program? HARP was a government program developed in April 2009 under the

  Federal Real Estate Finance Firm( FHFA)in response to the 2007-08 financial crisis. The concept was to assist property owners re-finance loans on homes that were worth less than their impressive home loan. Around 3.45 million debtors benefited from the program. HARP Loan-to-Value(LTV) Requirements HARP aimed to help debtors with a loan-to-value ratio( LTV)higher than 80%. Normally, these debtors have problem protecting refinancing

  due to the fact that of an absence of home equity, preventing them from taking advantage of falling interest rates . Initially, customers were qualified for HARP assistance if their LTV ratio was no greater than 105%. This cap was raised to 125%in July 2009, then lifted completely in October 2011. HARP by the Numbers In between the program's inception and February 2015, roughly 3.29 million mortgages were re-financed under HARP. Of these, 2.3 million had an LTV ratio of 80% to 105%. Over 567,000 home mortgages had an LTV of 105 %to 125 %, while 421,522 loans had ratios greater

  than 125 %. HARP was originally scheduled to expire at the end of 2016, however the federal government extended the program by 2 years. By the end of Dec. 2018, HARP re-finances totaled 3,494,395 because its beginning in 2009. What Were the Qualifying Criteria for a HARP Loan? Property owners were required to

  fulfill the following requirements to qualify for HARP: A standard requirement was a mortgage owned or guaranteed by Freddie Mac or Fannie Mae, closed on or before May 31, 2009. The initial loan needs to have had an LTV

  ratio of at least 80%. Crucially, the debtor might not be

  delinquent on their home mortgage payments. They might have no late payments over the previous 6 months and

• no greater than one 30-day late payment over the preceding 12 months. Debtors required to have a 660 minimum credit rating. The program didn't in fact lend cash. Instead, HARP dealt with lenders to use refinancing. Homeowners might talk to their present lender or access a HARP site to see if the loan provider participated in the program. What Replaced the HARP Loan Program? Although
• HARP has ended, Fannie Mae and Freddie Mac deal alternatives for financially distressed customers to refinance or modify their loans. Flex Adjustment Fannie Mae and Freddie Mac offer a Flex Adjustment program for existing loans with past-due payments of more than 60 days. These are loan adjustment programs that help economically distressed borrowers lower their month-to-month payments by

  20%. The payment decrease can result from a series of actions that consist of: Decrease of loan's interest rate(if eligible )Loan term extension, such as 40 years versus the standard 30-year mortgage loan Forbearance of a portion of the loan principal

  (obtained quantity), which represents a temporary

  reduction or adjustment to the loan balance Not all loan adjustments might accomplish the 20%payment reduction objective. Freddie Mac High LTV Re-finance Freddie Mac offers borrowers a re-finance with a 95%loan-to-value ratio (LTV )for a one-unit or single-family home. Customers can take a cash-out refinance however need to have an 80%LTV. How Did the HARP Loan Program Work? The HARP home mortgage program enabled debtors with home loan balances that surpassed

  their property worths to refinance their loans at a lower interest rate. The

  federal government program started on April 1, 2009, and ended on December

  31, 2018. What Does It Mean When a Home Mortgage Is Undersea? An underwater mortgage occurs when the loan balance exceeds the worth of the home securing the loan as security. Debtors can become undersea if the property worth decreases or

  the customer withdraws too much of the home's equity through a home equity loan, home equity credit line(HELOC

  ), or cash-out refinance. What Are the Options for Financially Distressed Mortgage Loan Debtors? The Flex Modification program used through Fannie Mae and Freddie Mac assists borrowers who have past-due payments

  of more than 60 days. The loan modification is

  created to minimize the month-to-month home mortgage payment by 20 %by reducing the rate, extending the loan term, or forbearance, which temporarily lowers the loan balance. The Bottom Line Before HARP expired, the program assisted countless homeowners to re-finance underwater home loans. While HARP didn't decrease the

  amount they owed, debtors gained from lower interest rates and regular monthly payments. Although HARP no longer exists, Fannie Mae and Freddie Mac deal programs for debtors. Source