Home Affordable Refinance Plan Wiki: Program Details and History

The Home Affordable Refinance Plan (HARP) was introduced in 2009 as part of the Making Home Affordable program.

It was designed to help underwater homeowners refinance their mortgages and take advantage of lower interest rates.

HARP allowed homeowners to refinance their mortgages without having to meet traditional underwriting standards.

This meant that homeowners could refinance their mortgages even if they owed more on the loan than their home was worth.

The program was a response to the housing market crisis, which had left many homeowners struggling to make their mortgage payments.

HARP was a key component of the Obama administration's efforts to stabilize the housing market.

The program was initially set to expire in 2010, but it was extended several times and ultimately ended in 2016.

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To qualify for the Home Affordable Refinance Plan (HARP), your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Many homeowners are unaware that their mortgages are linked to one of these organizations, since neither Freddie Mac nor Fannie Mae deals directly with the public.

The mortgage must have been acquired by Freddie Mac or Fannie Mae on or before May 31, 2009. This is a key requirement, so it's essential to check if your mortgage meets this criterion.

To determine if you have a Fannie Mae or Freddie Mac loan, you can visit their websites or call their customer service numbers. The government requirements for HARP are strict, but they're designed to help homeowners who are struggling to make their mortgage payments.

Here are the key eligibility criteria for HARP:

To qualify for HARP, you'll need to meet certain criteria. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, which might not be immediately clear since these organizations don't deal directly with the public.

The mortgage must have been acquired by Freddie Mac or Fannie Mae on or before May 31, 2009. This is an important deadline to keep in mind.

You can't have refinanced your mortgage under HARP before, unless it was a Fannie Mae loan that was refinanced between March and May 2009. This means you'll need to check your mortgage history to see if you've already taken advantage of this program.

To qualify, you must be current on your mortgage payments, with no late payments in the last six months and no more than one late payment in the last twelve months. This shows lenders that you're responsible with your payments.

The current loan-to-value ratio of your property must be greater than 80%. This is a key factor in determining your eligibility for HARP.

Here are the key qualifying criteria summarized:

By meeting these criteria, you'll be able to take advantage of the benefits that HARP has to offer, such as lower monthly payments or a more stable mortgage product.

The Home Affordable Refinance Program (HARP) was only available for mortgages guaranteed by Freddie Mac or Fannie Mae, created in coordination with these entities.

To be eligible for HARP, homeowners had to be in possession of mortgages sold to either Freddie Mac or Fannie Mae prior to May 31, 2009.

The program was launched in 2009 to help borrowers who were upside down or underwater on their home loans due to the 2008 financial crisis.

Borrowers had to be current on their mortgage payments and the property had to be in good condition to qualify for the program.

Borrowers who had already defaulted or had vacated their properties were not eligible for the program.

Harp 3.0 was referenced in President Barack Obama's 2012 State of the Union Address.

The plan aimed to give "every responsible homeowner the chance to save about $3,000 a year on their mortgage".

Harp 3.0 is expected to expand eligibility requirements to homeowners with non-Fannie Mae and non-Freddie Mac mortgages.

This includes homeowners with jumbo mortgages and Alt-A mortgages, as well as those whose original mortgages were stated income, stated asset, or both.

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The Home Affordable Refinance program was created to help homeowners who were struggling with their mortgage payments. It was launched in 2009 to slow the rate of foreclosures.

To be eligible for HARP, your mortgage had to be guaranteed by either Freddie Mac or Fannie Mae. This means you had to have sold your mortgage to one of these entities before May 31, 2009.

Homeowners who were upside down or underwater on their loans were a big focus of the program. This happens when you owe more on your loan than your property is worth.

To qualify for HARP, you had to be current on your mortgage payments. Your property also had to be in good condition.

If you had already defaulted on your loan or vacated the property, you weren't eligible for the program. This was to ensure that only responsible borrowers could take advantage of the program.

Any participating lender could help you with a HARP refinance. You didn't have to go through your current lender to get the process started.

The program ended on December 31, 2018, so it's no longer an option for homeowners.

Fannie Mae and Freddie Mac have a strategy in place to help homeowners who are struggling to make their mortgage payments. This plan is called the Fannie Mae/Freddie Mac Plan.

The goal of this plan is to make hundreds of thousands of mortgages more affordable for people who can't currently meet their monthly payments. This is done through the Special Modification Program (SMP).

The SMP allows servicers to change the terms of a loan to reduce the borrower's first lien monthly mortgage payment to 38 percent of their gross monthly income. The changes in terms may include one or more of the following:

The reduced interest rate will step up in annual increments to either the original loan interest rate or the market interest rate at the time of the modification, whichever is lower, after five years.

Refinancing can be a complex process, but it's a crucial step in taking advantage of the Home Affordable Refinance Plan (HARP). You'll need to meet the eligibility requirements, which include having a mortgage owned or guaranteed by Freddie Mac or Fannie Mae, and having a loan-to-value ratio of 125% or less.

To start the refinancing process, you'll need to contact your lender or a mortgage broker who can guide you through the application process. They'll help you determine if you're eligible for HARP and assist with the paperwork.

The refinancing process typically takes 30 to 45 days, and you'll need to provide financial documents, such as income verification and bank statements, to support your application.

Check this out: What Paperwork Do I Need to Refinance My Home

One of the best things about refinancing your home is that you can skip the home appraisal if a reliable automated valuation model is available in your area.

This can save you time and money, which is a big plus, especially if you're short on cash or have a busy schedule.

A mortgage servicer has the discretion to decide whether you qualify for an appraisal waiver, so it's worth checking with them to see if it's an option for you.

A fresh viewpoint: What Hurts a Home Appraisal for Refinance

The Streamlined Modification Process is a game-changer for homeowners facing foreclosure.

The industry has finally agreed on an industry standard, which is a benchmark ratio of 38 percent of monthly gross household income to calculate the affordable payment.

This framework will help homeowners who receive a streamlined modification, and also free up resources for servicers, ensuring borrowers don't fall through the cracks.

The Streamlined Modification Program (SMP) was developed in collaboration with the FHFA, the Department of Treasury, Freddie Mac, and members of the HOPE NOW Alliance.

To create an affordable payment, servicers can extend the term, reduce the interest rate, and forbear interest, making it easier for homeowners to stay in their homes.

In the event that the affordable payment is still beyond the borrower's means, their situation will be reviewed on a case-by-case basis using a cash flow budget.

The SMP differs from the IndyMac model in a few areas, but uses the same fundamental tools to achieve the same affordability target.

The FDIC's experience and assistance were greatly beneficial in developing the Streamlined Modification Program.

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The Home Affordable Modification Program, or HAMP, was introduced in 2009 to help homeowners struggling with subprime mortgages. It's part of the Making Home Affordable program.

HAMP is set to expire on December 31, 2016, which means the last day to submit applications is December 31, 2016. The Modification Effective Date must be on or before September 30, 2017.

HHF, or the Hardest Hit Fund program, provides targeted aid to homeowners in states hit hardest by the economic crisis. It works in tandem with HAMP and most MHA programs.

If you're considering refinancing through HAMP, keep in mind that HHF has been extended to 2020.

The Making Home Affordable (MHA) Program has a complex calculation called the net present value (NPV) test, which is the foundation of the HAMP program. This test determines whether modifying a mortgage will result in more money for the investor than foreclosing.

HAMP has two tiers, Tier 1 and Tier 2, each with its own NPV test. The NPV test is a key factor in determining whether a mortgage will be modified.

Here are the key rules to keep in mind:

The HARP program has helped nearly 894,000 borrowers refinance their mortgages as of August 31, 2011. This shows the impact of the program in providing relief to homeowners.

Many homeowners with private mortgage insurance (PMI) can refinance through the Making Home Affordable Refinance Program under HARP 2.0.

HARP 2.0 allows homeowners with PMI to apply for refinancing through any lender, not just their original lender.

This is a significant change, as many homeowners have faced difficulty refinancing with their original lender.

The new loan must provide the same level of mortgage insurance coverage as the original loan, which can be challenging and time-consuming, especially for lender-paid private mortgage insurance (LPMI).

Fortunately, HARP 2.0 enables homeowners to shop around and find a lender that is willing to work with them.

For your interest: Funeral Home Business Insurance

The Making Home Affordable (MHA) Program has its own set of rules, outlined in the MHA Handbook, which is a consolidated reference guide for the program.

The HAMP component of the MHA Program uses a complex calculation called the net present value (NPV) test to determine whether a mortgage should be modified or foreclosed. This test compares the net present value of cash flows with and without modification.

To qualify for HAMP, borrowers must meet specific requirements, but the details of these requirements are not specified in the provided article sections.

The Home Affordable Refinance Program (HARP) has its own set of rules, which include requirements for borrowers and lenders. Borrowers must have been in possession of a mortgage that was sold to either Freddie Mac or Fannie Mae prior to May 31, 2009.

Here are the key requirements for HARP:

The HARP program was only available to borrowers who qualified, and it ended on December 31, 2018. Borrowers who had already defaulted or had vacated their properties were not eligible for the program.

Nearly 894,000 borrowers had refinanced through HARP as of August 31, 2011.

The program offers various incentives to servicers, lenders, and responsible borrowers to encourage participation and successful loan modifications.

Servicers that modify loans according to the guidelines will receive an up-front fee of $1,000 for each modification, plus "pay for success" fees on still-performing loans of $1,000 per year.

Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.

The program provides one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.

Here are the payment incentives for stakeholders:

The program also includes incentives for extinguishing second liens on loans modified under this program, but the specific details are not provided in this section.

Transparency and accountability are crucial components of the program. Measures to prevent and detect fraud, such as documentation and audit requirements, will be central to the program.

Servicers will be required to collect, maintain and transmit records for verification and compliance review, including borrower eligibility, underwriting, incentive payments, property verification, and other documentation.

To ensure compliance, servicers must keep accurate records. This will help prevent and detect any potential issues.

Freddie Mac has been appointed the compliance officer of the program. This means they will be responsible for overseeing and enforcing the program's rules and regulations.

Here is a summary of the key requirements:

The Updated Hope for Homeowners program has made some significant changes to help homeowners. One of the main improvements is the elimination of the 3% upfront premium.

This change can be a huge relief for many homeowners who were previously required to pay this premium. Additionally, the annual premium has been reduced to a range between .55% and .75%, based on risk-based pricing.

This means that homeowners will now pay less for their mortgage insurance. The program has also made a technical fix to permit discontinuation of fees when the loan balance drops below certain levels, consistent with normal FHA policy.

Here are the key changes to the annual premium:

Homeowners with a higher mortgage debt to income (DTI) ratio will also benefit from the updated program. The maximum loan to value (LTV) has been raised from 90% to 93% for borrowers above a 31% mortgage DTI ratio or above a 43% ratio.

This means that homeowners with a higher DTI ratio will now be eligible for a larger loan amount. The program has also eliminated government profit sharing of appreciation over market value of home at time of refi.

This change removes a potential financial burden for homeowners who sell or refinance their homes. The government will still retain a declining share (from 100% to 50% after five years) of equity created by the refi, to be paid at time of sale or refi as an exit fee.

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If you're interested in exploring other options for refinancing your home, the Federal Housing Administration (FHA) offers several programs, including the FHA Streamline Refinance and the FHA Title 1 Loan Program.

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The FHA Streamline Refinance allows homeowners to refinance their existing FHA mortgage without a credit check or appraisal, making it a faster and more streamlined process. This program is available to homeowners who are current on their mortgage payments and want to lower their interest rate or monthly payment.

The FHA Title 1 Loan Program provides financing for home improvements and repairs, which can be a great option for homeowners who need to make repairs or upgrades to their home. This program offers a fixed interest rate and a repayment term of up to 20 years.

Homeowners who are struggling to make their mortgage payments may also be eligible for the Home Affordable Modification Program (HAMP), which can help them lower their monthly payment by reducing their interest rate or extending the term of their loan.

The Home Affordable Refinance Plan (HARP) was a government-sponsored initiative that helped millions of homeowners refinance their mortgages.

Launched in 2009, HARP was designed to help underwater homeowners refinance their mortgages, reducing their monthly payments and providing relief from high interest rates.

Homeowners who were current on their mortgage payments but had little to no equity in their homes were eligible for HARP, which allowed them to refinance their mortgages without having to pay private mortgage insurance (PMI).

The program was administered by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that guarantee a large portion of the country's mortgage loans.

HARP was a key component of the Obama administration's economic stimulus package, aimed at stabilizing the housing market and preventing a wave of foreclosures.

By refinancing underwater mortgages, HARP helped reduce the number of foreclosures and kept millions of homeowners in their homes.

The Home Affordable Refinance Plan (HARP) program had a clear sunset date. On May 8, 2015, Mel Watt announced that the program would cease at the end of 2016.

The program was formed to provide relief for borrowers facing mortgage payment challenges. It allowed lenders and servicers to approve new HAMP modifications and HARP refinances.

The program's eligibility and verification criteria were strict, but necessary to ensure that only those who truly needed the assistance received it. To qualify, borrowers had to meet specific requirements, including having loans originated on or before January 1, 2009.

Here are the key eligibility criteria:

The program was formed with specific eligibility and verification criteria in mind. These criteria determined which loans would be eligible for modification.

Loans originated on or before January 1, 2009, were eligible for the program. This was the starting point for consideration.

First-lien loans on owner-occupied properties with unpaid principal balances up to $729,750 were also eligible. Higher limits were allowed for owner-occupied properties with 2-4 units.

To qualify, borrowers had to fully document their income, including signed IRS 4506-T forms, paystubs, or tax returns, and an affidavit of financial hardship. This ensured that borrowers were genuinely struggling to make payments.

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Property owner occupancy status was verified through borrower credit reports and other documentation. No investor-owned, vacant, or condemned properties were allowed.

The program provided incentives for lenders and servicers to modify loans for borrowers who were at risk of default. This was done to prevent foreclosures and help struggling homeowners stay in their homes.

Modifications could start as early as now and had to be completed by December 31, 2016. Each loan could only be modified once under the program.

The program's sunset was a significant milestone in its history. Mel Watt announced at the Greenlining Institute 22nd Annual Economic Summit on May 8, 2015, that the program would cease at the end of 2016.

The Director of the FHFA explained that the decision was made because many eligible borrowers had already taken advantage of the program. Lenders and servicers were continuing to approve new HAMP modifications and HARP refinances.

Extending the program through the end of 2016 would provide real relief for borrowers who continued to face challenges paying their mortgage or refinancing their loan. This decision aimed to help those who were still struggling.

The Streamlined Modification Program (SMP) requires participating servicers to service all eligible loans under the rules of the program unless explicitly prohibited by contract.

Participating servicers must use reasonable efforts to obtain waivers of limits on participation.

To determine if a loan should be modified, servicers will use a net present value (NPV) test. This test compares the net present value of cash flows with modification and without modification.

The NPV test is a crucial step in the loan modification process, and it's spelled out in the guidelines. Servicers must follow a specified sequence of steps to reduce the monthly payment to no more than 31% of gross monthly income (DTI).

Here are the key steps in the modification sequence:

The interest rate reduction is not fixed and will generally increase 1%/year until it reaches the current rate 5 years after the modification. This can lead to a balloon payment at the end of the first 5 years, which can be a challenge for homeowners.

The Streamlined Modification Program (SMP) requires participating servicers to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. This test compares the net present value of cash flows with modification and without modification.

The NPV test is a crucial step in determining whether a loan should be modified. It's a complex calculation, but essentially it helps servicers figure out whether modifying a loan will lead to more financial stability for the borrower in the long run.

To pass the NPV test, the net present value of expected cash flow must be greater in the modification scenario. If the test is positive, the servicer must modify the loan, unless there's evidence of fraud or a contract prohibition.

Here are the parameters of the NPV test, as outlined in the guidelines:

The modification sequence requires servicers to reduce the monthly payment to no more than 31% of gross monthly income (DTI). This is done by first reducing the interest rate for a trial period of 3-9 months, subject to a rate floor of 2%. If necessary, the term or amortization of the loan can be extended up to a maximum of 40 years, and then principal can be forbearing.

Modifying a second loan can be a complex process, but it's often a necessary step for homeowners struggling with multiple mortgages. If you have a first loan modified under the Home Affordable Modification Program (HAMP), you're likely to also modify your second loan.

In most cases, if your second loan is eligible, it will be modified or partially or fully extinguished. This is a huge relief for homeowners who were worried about juggling multiple loan payments.

The program that allowed for these modifications, HAMP, expired on December 31, 2016. This means that homeowners who were relying on this program to modify their second loans may need to explore other options.

For more insights, see: Refi 2nd Home