What Happened To The HARP Refinance Program 3.0?
Not long after the introduction of the Home Affordable Refinance Program 2.0, the Obama Administration announced plans of a HARP 3.0. So, when is the newer version of HARP 2.0 going to be released?
Unfortunately, the discussion of a HARP 3.0 seem to have fallen short with no plans in the making. The Home Affordable Refinance Program (HARP) was first introduced in April of 2009 and went through its final revision in November 2011 where its Loan-To-Value (LTV) limitations were removed which then released HARP 2.0, allowing for homeowners with 125% LTV to refinance their mortgage. The program was set with a deadline of December 31, 2013. The government then extended the program’s availability to December 31, 2015 in hopes of reaching more U.S. homeowners.
With just 12 months left of the program’s existence, underwater homeowners must act soon as there may be no HARP 3.0 after all.
The Growth of The Home Affordable Refinance Program (HARP)
A total of 3.25 million HARP loans have been completed since the program’s inception. Despite the large number of loans closed since the start of HARP 2.0, the goal for the program was to reach at least 7 million U.S. homeowners.
The month of September 2014 had a total of 14,399, whereas October only generated a total of 13,745 HARP refis. This comes as a surprise since mortgage rates were at their lowest and the best level its been since 2013. Has the program been exposed enough? The government doesn’t seem to think so and believes that there are still underwater homeowners out there who may not be aware of the program’s existence, or that there may be more skeptics than they expected.
The HARP Program is definitely not a scam, as many homeowners may have assumed ” it is all too good to be true”. HARP 2.0 has helped homeowners save up to 35% annually. Currently in the U.S., there is an estimate of at least 720,000 homeowners who are in fact eligible for the program.
With mortgage rates expected to increase and home values already higher, The FHFA (Federal Housing Finance Agency) stresses that now is the best time to take advantage of the HARP program to ensure borrowers the ability to capitalize on the lowest rate possible.
As soon as we get into the new year, we may not see any drop in mortgage rates for a while.
Recap On The HARP Refinance Program 2.0
The HARP refinance program also referred to as the “Obama Refi” program was set out to help underwater homeowners who were once denied a traditional refinance of their mortgage due to LTV limitations.
Since removing the LTV limits and allowing for homeowners with 125% LTV or higher to refi, the program has attracted several underwater homeowners and relieved millions of homeowners nationwide from their high monthly mortgage payments.
The HARP program was released around the time in which current mortgage rates were steadily dropping along with property values in the U.S.. With little equity available to refinance the traditional way, the HARP refinance program paved the way for many devastated homeowners.
The program offers homeowners a chance to either refinance to a lower monthly mortgage payment or a better loan term. The idea of such a program did not only come as a way to help out underwater homeowners, but also to help boost the health of the economy. The Obama refi program was going to help the American people keep more money in their pockets so that they would be able to put money back into the economy through daily spending.
The two basic criteria that homeowners must meet in order to be considered eligible for the program are:
- Your loan must be backed by Fannie Mae or Freddie Mac
- Your current mortgage must have a note date of no later than May 31, 2009
Despite the HARP refinance program’s inability of reaching its goal of 7 million homeowners in the U.S., HARP has definitely helped out those who chose to take their matters into their own hands and refinanced with the program.
Two years after the HARP program was introduced, there was a final revision, this time:
- New mortgage lenders were secured and were no longer held responsible from errors of the original lender
- All loan-to-value restrictions were removed; 125% LTV was no longer a limit
Because new lenders were no longer held responsible for any mistakes made on the mortgage loans from the original lender, this ensured less risk for HARP-Approved lenders. As soon as the revisions were made and HARP was reintroduced to the public, the volume of HARP application volumes were higher than ever before. Since home values are increasing, we can expect to see a drop in high LTVs as we head into 2015.
