HARP is Gone. What Now?
The government backed Home Affordable Refinance Program (HARP), was created in 2009 in an effort to help homeowners who were in over their heads on their mortgages after the recession started in 2008. It was discontinued on December 31, 2018, with HARP replacement programs launching in 2019.
With over 3.4 million homeowners taking advantage of HARP to refinance their mortgages during the 9 years of its existence, the HARP program has been touted as “one of the most successful crisis-era programs” according to the Federal Housing Finance Agency (FHFA). The availability of the government program allowed these people to keep their homes when many had lost their jobs or couldn’t afford to keep paying their monthly mortgages at their current rates.
The HARP program had multiple extensions and makeovers, however due to the more recent uptick in the nations economy, the popular program was officially discontinued on December 31, 2018.
But what about those homeowners who could still have qualified for the HARP program? Well, luckily there are some new options in 2019.
Mortgage Refinance Programs for 2019
The government assistance concerning home loans was a big success in helping homeowners keep their homes. When the FHFA announced that the Government-Sponsored Enterprises (GSEs), Freddie Mac and Fannie Mae, were to discontinue the HARP program at the end of 2018, they announced a rollover plan to replace HARP as well.
According to the FHFA, the new High LTV Refinance Programs through the GSEs will “provide much-needed liquidity for borrowers who are current on their mortgage but are unable to refinance because their loans have LTV ratios that exceed the Enterprises’ maximum limits.” These programs will share a lot of similarities to their predecessor and some added benefits to those borrowers who cannot qualify for regular mortgage refinancing options.
The new High LTV Streamlined Refinance Offering is more targeted than HARP but as with HARP, eligible borrowers are not subject to a minimum credit score. There is no maximum debt-to-income ratio or maximum LTV, and an appraisal often is not required. However, unlike HARP, there are no eligibility cut-off dates connected with the new offering. Borrowers will also be able to use it more than once to refinance their mortgage. Borrowers with existing HARP loans are not eligible for the new program, but may be eligible to refinance with one of the Enterprises traditional refinance products.
The HARP Replacement Programs
The FHFA announced back in 2016 the rollover programs for HARP. The new programs are Fannie Mae’s, “High LTV Refinance Option” and Freddie Mac’s, “Enhanced Relief Refinance”. These programs are designed to implement new refinancing options for those homeowners who have a high Loan-to-Value (LTV) ratio. Like their predecessor HARP, the new deals will offer up options for those homeowners who are strapped for cash, yet current on their mortgage payments. This gives liquidity to those homeowners, as they get to borrow against the value of their home.
The New Refinance Programs
Loans for these programs must be closed no sooner than January 1st, 2019, the day after the HARP program expires. However, lenders began taking applications on November 1, 2018 to initiate the rollover. Qualified homeowners will be able to refinance while interest rates are at their current lows, giving them a long-term deal with low risk terms and high affordability. Here are some facts about new HARP replacement programs in 2019:
- The current programs only accept mortgage loans that were close on or after October 1st, 2017. If you have a mortgage prior to that date, you are not eligible for either of these refinance programs. Learn more about other mortgage refinance options here.
- If a home was refinanced via the HARP program, the applicant is not eligible to refinance through either the High LTV Refinance Option or Enhanced Relief Refinance programs.
- Home loans must stay with their current lender, meaning if a loan was issued through Freddie Mac, the homeowner can only qualify for the Enhanced Relief Refinance program and not the High LTV Refinance Option.
- Homeowners are able to refinance their homes through these programs more than once. This was not the case with HARP.
New Benefits to HARP Replacement Programs
With the new programs come some new benefits to homeowners who do qualify. Here’s a list of some of the benefits:
- There is no minimum Credit Score requirement for these refinance options.
- Processing the loans should be faster and easier than the original method. Learn more about underwriting mortgage loans here.
- Whether it be a single-family home, condo, multi-unit, doesn’t matter. Any occupancy type of mortgage loan can qualify.
- Borrowers who’s loan applications are underwritten electronically may not have to pay for a second home appraisal.
- Adjustable Mortgage Rates can be swapped out for Fixed Mortgage Rates.
How to Qualify for the New HARP Replacement Programs
There are of course some stipulations to qualifying for one of the new programs via the GSEs. Here is a list of some information on how to qualify for a HARP replacement program:
- No missed mortgage payments within the previous six months.
- Cannot have missed more than one mortgage payment in the previous 12 months.
- Homeowners applying must have a source of income.
- Must have a high LTV ratio. If a borrower qualifies for a regular mortgage refinance option, they will not qualify for the HARP replacement programs.
Qualified homeowners will be able to refinance while the interest rates are low, giving them a long term deal at low risk and high affordability.