One of the most beneficial consumer rescue programs from the Great Recession era is about to expire. The Home Affordability Refinance Program—known as HARP—was passed by a bipartisan Congress in 2009, to enable borrowers who were under water on their homes, or close to under water, to refinance into more affordable mortgages.
The original guidelines said that you had to have between an 80% to 125% loan-to-value ratio to qualify. (Anything over 100% means you owe more than the home is worth.) Now there is no limit to how under water the borrower must be to qualify. The loan must have been issued before May 31, 2009.
The additional qualifier is that the loan must be owned or guaranteed by either Fannie Mae or Freddie Mac, which is actually a very high percentage of the total. And people who apply for HARP relief have to be current on their mortgage—meaning no 30+ day late payments in the last six months, and no more than one late payment in the last 12 months. People can apply for shorter term loans, or change from an adjustable to a fixed-rate mortgage—and it doesn’t matter what their credit score is.
Obviously, as we get further from May 31, 2009, the number of people who would qualify has gone down. But privately, some economists estimate that there are thousands of homeowners who are still struggling to stay current on mortgages that are at or near the value of their homes. The end date to get a HARP refinance is December 31 of this year, so those people are running out of time.
People in this situation can get a lot of helpful guidance from the HARP.gov website. They can do a quick check of their eligibility using this online tool, and they can calculate how much they would save by refinancing if they use Freddie Mac’s online calculator. The refinancing would be available through many banks, probably including wherever they’re currently banking.
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