Explaining HARP 2.0
President Barack Obama announced HARP 2.0, a revised form of the Home Affordable Refinance Program, back in December. Which is some great news for underwater homeowners. What exactly is this program though and what are the qualifying guidelines to take advantage of the program?
To begin, a quick history lesson on HARP. It was first introduced back in 2006 by the Federal Housing Finance Agency. The goal was to allow homeowners with a loan-to-value (LTV) ratio higher than 80% to refinance without worrying about payments on mortgage insurance. Later within the same year, the LTV cap was raised up to 125% allowing countless Americans to take advantage of the program.
Once December 2011 rolled around, President Barack Obama expanded the Home Affordable Refinance Program until December 31, 2013. The program was thus dubbed, HARP 2.0. A few key changes to the program came along with this extension as well. All of which are meant to further benefit homeowners in tough situations with their current mortgage situations.
The biggest change instituted was the elimination of the LTV cap, previously set to 125%. Now all homeowners in an “underwater” situation have the option to refinance as long as they meet just a few criteria:
- Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
- The mortgage was fully completed on or before May 31, 2009. Anytime after is not deemed acceptable.
- Owner must NOT have a previous HARP refinance of the mortgage. UNLESS the loan is owned/guaranteed by Fannie Mae which was refinanced under HARP between March and May of 2009.
- The homeowner must be current (on-time) with their mortgage payments. No 30-day late payments anytime in the last six months and no more than one late payment in the past 12 months.
- MUST benefit from the loan through lower monthly payments or the move to a more stable product.
If you fit the criteria for HARP or actually don’t know if you meet the criteria you can get ahold of certified loan officers who could go through the information with you over the phone or via email. That way it can be properly determined if you can take full-advantage of HARP 2.0.