The Federal Housing Finance Agency (FHFA) has launched a new website and hired HGTV personality and Power Broker star Mike Aubrey to help raise awareness about the Home Affordable Refinance Program (HARP), which offers refinancing to assist homeowners who are underwater on their mortgages.
The new website, www.harp.gov, and celebrity endorsement are part of a nationwide campaign to boost HARP participation rates.
Launched in 2009 as a joint project of the FHFA and the Treasury Department, HARP was designed to assist borrowers with existing mortgages owned or guaranteed by government-sponsored enterprises (GSEs) Freddie Mac or Fannie Mae with refinancing, even if they had little or no equity, or were underwater. Although the program has been a relative success, it hasn't attracted as many borrowers as the FHFA had anticipated.
Initially, the FHFA had forecast that 4 million to 5 million borrowers would take advantage of the program, but by September 2011, the participation rate was less than 1 million. In response, the FHFA, along with the GSEs and other industry stakeholders, identified several issues that were deterring homeowners from using the program, including the fact that loans with loan-to-value (LTV) ratios greater than 125% were not eligible for HARP refinances and that the program's short duration (approximately 15 months) was discouraging lenders from participating.
After soliciting feedback from stakeholders, many of the problems with HARP were addressed, compromises were made and in October 2011, a re-branded program, ‘HARP 2.0,’ was launched. Changes included removing the 125% LTV ceiling and extending the duration of the program by 18 months.
Since that last round of changes, however, participation has continued to decelerate. According to the FHFA, HARP refinancing volume continued to drop during the second quarter of this year – although volume remains at above-average levels prior to program changes implemented last year.
Meanwhile, the Office of the Inspector General has identified additional barriers to HARP participation and a new round of modifications to the program has been proposed; however, the so-called ‘HARP 3.0’ program is yet to be approved and codified.
Prior to the rollout of HARP 3.0, however, the FHFA is embarking on a major nationwide public relations campaign to educate borrowers about HARP, which was recently extended to run through 2015.
With mortgage rates still historically low and HARP eligibility requirements expanded, qualifying homeowners could reduce their monthly mortgage payments or increase their equity faster with a shorter term mortgage, the FHFA states in a release.
‘To date, more than 2.8 million homeowners have refinanced through HARP,’ says FHFA Acting Director Edward J. DeMarco. ‘With the launch of this campaign, we look forward to reaching those homeowners who may not know about the program or understand the eligibility criteria to take advantage of today's low interest rates by refinancing through HARP.’
‘HARP is an absolute no brainer for eligible homeowners,’ says Aubrey. ‘This program allows underwater homeowners the option to refinance at a lower rate and, in my book, that is a great deal.’
‘I spend my time on TV and as a realtor trying to get great deals for my clients,’ Aubrey adds. ‘FHFA has already done the legwork to create an amazing deal. It's as simple as finding out if you qualify, getting the refinance done and watching the savings add up.’
To be eligible for a HARP refinance, a homeowner's loan must be owned or guaranteed by Fannie Mae or Freddie Mac and must have been sold to either company on or before May 31, 2009. In addition, the current LTV must be greater than 80%, and the borrower must be current on mortgage payments, with no late payments in the last six months and no more than one late payment in the last 12 months.
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