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HARP: Helping Homeowners Refinance When Underwater

The Home Affordable Refinance Program (HARP) was a now-expired government program designed to help homeowners who were “underwater” on their mortgages, meaning they owed more than their homes were worth, refinance their loans. HARP aimed to provide a path to lower interest rates and more manageable monthly payments, even if the homeowner had little or no equity.

Who Was HARP For?

HARP was specifically for homeowners whose mortgages were owned or guaranteed by Fannie Mae or Freddie Mac. The program was particularly helpful for those who purchased their homes before the housing market crash of 2008 and subsequently saw their property values decline significantly. Key eligibility requirements included:

• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The borrower must not have previously used HARP, unless the previous HARP refinance was voided.
• The borrower must be current on their mortgage payments with a good payment history (no late payments in the past six months and no more than one late payment in the past 12 months).

Benefits of HARP

The primary benefit of HARP was the opportunity to refinance into a lower interest rate. This could result in significant savings over the life of the loan and a more affordable monthly payment. Other potential benefits included:

• Reduced Monthly Payments: Lower interest rates could significantly lower monthly mortgage payments, freeing up cash for other expenses.
• Improved Financial Stability: Refinancing could provide a more stable financial situation for homeowners struggling to keep up with their mortgage payments.
• Shorter Loan Terms: Some homeowners used HARP to switch to a shorter-term mortgage, allowing them to pay off their loan faster.
• No Appraisal Required (in many cases): HARP often waived the requirement for a new appraisal, which could save homeowners money and time. This was especially beneficial for those with significantly underwater mortgages.

HARP’s Expiration

HARP officially expired on December 31, 2018. While the program is no longer available, it served as a crucial lifeline for many homeowners during and after the housing crisis. It’s important to note that while HARP is gone, other refinance options exist for homeowners looking to improve their mortgage terms. These include conventional refinance options, FHA refinance, and VA refinance programs. Homeowners should explore these alternatives and consult with a mortgage lender to determine the best option for their individual circumstances.

Legacy of HARP

HARP played a vital role in stabilizing the housing market and helping homeowners stay in their homes during a difficult economic period. It provided a much-needed path to affordability and financial security for millions of Americans. Its impact continues to be felt today as it helped prevent widespread foreclosures and contributed to the eventual recovery of the housing market.

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