HARP 2.0 Refinance Program
Individuals who invested in homes years ago, and are now finding themselves with unaffordable mortgages, and a depreciating home value benefit most from The Home Affordable Refinance Program (HARP). This program is also commonly referred to as HARP 2.0, the Obama Refinance Program, and the DU Refi Plus. It is a federal program, which first originated back in March 2009 through the Federal Housing Finance Agency (FHFA). President Barack Obama ordered the Making Home Affordable Program to attempt to save the economy and keep homeowners securely at their current residences.
HARP Eligibility Guidelines
In order to qualify for a HARP mortgage plan, it has to benefit a homeowner in one or more of the below ways:
- Lowering monthly interest fees or payments.
- It reduces the mortgage term.
- The new loan provides a more stable loan than the existing adjustable rate or interest only option on a current loan.
To determine eligibility, all borrowers must meet certain criteria such as:
- The home loan must be owned and/or backed by Fannie Mae or Freddie Mac.
- Applicants must mostly be current on their loans, meaning no payments that are over 60 days late in the past year.
- In the last 6 months, all payments must have been made on time.
- Prime applicants own over 80% of their home’s estimated value.
The spirit of the HARP Mortgage and the recent guideline changes is to provide benefit to homeowners that lost a significant value in their properties and now find themselves at above 80% loan to value for principal residences and above 75% for second homes and rental properties. Even second mortgage subordination agreements and Mortgage Insurance contingencies are not posing as major roadblocks.
Approved Properties
Accepted residences are consistent with Fannie Mae and Freddie Mac guidelines including:
- Detached Single Family Residence
- Attached 1-4 units
- Condominiums
- Townhomes
- Planned Unit Developments
- Manufactured Homes
Unlike most loans where only a primary resident can obtain funds, HARP is available to non-owner occupied investment homes and second homes. In these cases, the loan to value ratio is approved for someone who still owes 75% of their debt versus the standard 80%.
Loan-to-Value Requirements
Recently, HARP 2.0 was launched. This program’s goal is to help people who are severely underwater with their mortgages. The target homeowners for this program typically suffer from Loan-to-Value exceeding 125%.
How exactly is the Loan-to-Value calculated? Discover the most common calculations below:
Appraised / Surveyed Value – This is required and should be conducted by a licensed professional appraiser.
Estimated Value – Lenders and various parties may use internal estimates, and in this case no professional appraiser is needed.
Actual/Transaction Value – In this case, HARP goes by the direct property appraisal.
Separate Appraisal Requirements
Since this program is open to homeowners with a much great LTV, less steps are made when determining eligibility and home value. In some cases, a full appraisal in required, while in other instances, an online evaluation is conducted. Yet, in many cases, homes will not be appraised at all.
Properties often eligible for HARP 2.0:
- Fannie Mae DU Plus Single unit properties.
- Freddie Mac Relief Mortgage – Open Access 1 and/or 2 unit properties.
- Primary residences, second homes and investment properties. Loan-to-Values exceeding 80%.
- Condominiums
- Townhomes
HARP 2.0 Frequently Asked Questions
My loan is owned by Fannie Mae, but it says that I don’t qualify for HARP?
This is because Fannie Mae needed to receive your loan on May 31, 2009 or before that date for consideration.
How do I find out if Freddie Mac owns by loan, and not Fannie Mae?
On Freddie Mac’s website users can find a Loan Look-up Tool where they can search their loan origin online. Only basic information is required, and it will help homeowner’s determine if they are indeed eligible for the HARP program.
If someone applied for a HARP loan in 2009 can they apply again?
Yes. Back in 2009, eligibility requirements were very different. Thanks to additional elements such such as HARP 2.0, people who may not have qualified back in 2009, will now qualify for the program.
