HARP 2.0 Provides Real Help for Underwater Homeowners

According to recent estimates, about 11 million homeowners in the U.S. are “underwater” on their mortgage (i.e., they owe more on their mortgage than the home is worth). Fortunately for many of these homeowners, real help is now available through the recently revamped Home Affordable Refinance Program (HARP). Often called HARP 2.0, the reworked program went into effect in December of 2011 in order to help more homeowners refinance into new and more stable mortgages.

If you’re one of these underwater homeowners, here’s what you need to know about HARP:

What is HARP? HARP is a government program under the joint auspices of the Departments of the Treasury and Housing and Urban Development. It was specifically designed for homeowners with Freddie Mac or Fannie Mae Loans who have no equity in their homes and who are current on their mortgage payments. Originally, the program was limited to homeowners whose loan-to-value ratio on their homes was between 80 percent and 105 percent. Now, however, the program has been tweaked to allow homeowners to take advantage of the program no matter how far underwater they are.

Who is eligible? The eligibility requirements are very specific. Here are the details from the HARP website, MakingHomeAffordable.gov:
• Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Freddie Mac or Fannie Mae on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May 2009.
• You must be current on your mortgage at the time of the refinance with a good payment history over the last twelve months.
• The current loan-to-value ratio must be greater than 80%.
Also, be aware that this is a new loan—not a modification—and will require a full loan application and refinance fees will apply, although HARP does have lower fees in many cases.

How can I participate? Although HARP is offered by many lenders, there are some mortgage providers that are not participating in the program. Also, as a word of warning, you should go through your lender or broker directly rather than going through a website that may be unaffiliated with HARP. According to the Council of Better Business Bureaus, many of the websites that offer to help underwater homeowners are actually scams.

To see if HARP is the right solution for you, contact your mortgage provider. For more info on the program, visit www.FreddieMac.com or www.FannieMae.com. ∆