If you were previously found to be ineligible for the Home Affordable Refinance Program (HARP), we have good news: changes made to the program may mean that you’re now eligible. Under this improvement, known as HARP 2.0, the limit on the loan-to-value (LTV) ratio—or the amount the borrower owes on a mortgage divided by the appraised value of a property—was changed from 125% and below to include people with LTVs greater than 125%. This means that the benefits of HARP are now available to hundreds of thousands more Americans who were previously ineligible.
HARP Before and After
When HARP was first introduced in the midst of the housing crisis, the program restricted any LTVs greater than 125%. However, when the first version of HARP—or HARP 1.0—became such a huge success, lowering monthly payments for literally millions of Americans, the federal government resolved to change the program’s requirements to help even more homeowners.
With HARP 2.0, the LTV cap was lifted to include LTVs above 125%. This allowed hundreds of thousands of homeowners to be eligible to take advantage of the low-interest refinance options that the program provides.
In addition, when it was first introduced, HARP determined Fannie Mae or Freddie Mac borrower eligibility based on the settlement date of their loan. HARP 2.0 changed this by making eligibility based on the note date of the loan. If the note date fell on or before May 31, 2009, the loan would be eligible. As Freddie Mac and Fannie Mae’s databases were updated in the intervening years, it required that some of their borrowers would have to prove their HARP eligibility by furnishing their loan documentation, while others would simply be able to find proof of their eligibility on the Fannie Mae and Freddie Mac websites. This change also gave eligible homeowners additional weeks and months to take advantage of HARP.
Finally, the program was expanded further to stay in effect through December 31, 2015, and was then extended again through 2017. Whether these extensions will continue to the HARP program remains to be seen, making it more important than ever that homeowners look into this option as soon as possible.
To find out if you qualify for a HARP Loan, fill out our quick 1-minute form to have a Mortgage Advisor contact you.