HARP Extended Again, This Time As A ‘Bridge’ To A New Program

Posted by Patrick Barnard on August 25, 2016 1 Comment

Turns out the Home Affordable Refinance Program (HARP) isn’t sunsetting just yet.

The program has been extended for a third time – this time to September 2017 – the Federal Housing Finance Agency (FHFA) has announced.

However, this time around, the program is being extended in order to create a “bridge” to a new high loan-to-value (LTV) streamlined refinance offering that will essentially replace HARP.

This new offering, the agency says, will provide much-needed liquidity for borrowers who are current on their mortgages but are unable to refinance through traditional programs because their LTV ratios exceed the enterprises’ maximum limits. It will build on the lessons learned from HARP and its streamlined approach to refinancing.

In order to qualify for the new offering, borrowers must not have missed any mortgage payments in the previous six months; must not have missed more than one payment in the previous 12 months; must have a source of income; and must receive a benefit from the refinance, such as a reduction in their monthly mortgage payments, the FHFA says in a release.

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 will not be required.

However, unlike HARP, there are no eligibility cutoff dates connected with the new offering, and borrowers will be able to use it more than once to refinance their mortgages.

Borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of Fannie Mae or Freddie Mac’s traditional refinance products.

“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the enterprises,” says Melvin L. Watt, director of the FHFA, in a press release. “This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”

HARP and the Home Affordable Modification Program were originally launched in 2009 and were set to expire on Dec. 31, 2013; however, in 2013, they were extended through 2015. The two programs were later extended again, albeit separately, through 2016.

The decision to extend the program comes as participation is waning. The FHFA reports that 18,310 borrowers refinanced their mortgages through the program from Jan. 1 through June 30 of this year – the lowest participation rate since the second quarter of 2009, when the program was first launched.

The FHFA’s second-quarter Refinance Report shows that although total refinance volume increased in June, as mortgage interest rates edged lower, HARP refinances represented only 4% of total refinances.

The program has helped more than 3.4 million struggling homeowners retain their homes in the aftermath of the Great Recession, the FHFA says.

More than 323,000 U.S. borrowers are still eligible for the program and have a financial incentive to refinance as of the first quarter of this year, the FHFA reports.

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Comments

  1. the reason no one refinances w/ harp products is that the harp product will not combine a first mortgage with a line of credit or home equity 2nd mortgage loan that uses the home as collateral. If the harp program would allow homeowners to roll their multiple mortgages and home equity lines of credit together ….then the harp package could serve the majority of the country and 50% of loans would be harp based. As it stands now…the number is less than 5% . AS LONG AS NO ONE IN WASHINGTON UNDERSTANDS WHY THE COUNTRY CAN’T SELL A HOUSE OR BUY A HOUSE…IN OTHER WORDS MOVE….THERE WILL BE NO HOUSING RECOVERY.
    THE APPRAISER’S ARE DIOTS THAT NOW SIMPLY LOOK UP THE REAL ESTATE ” ALS NUMBERS” PUBLISHED BY FREDDIE MAC AND FANNIE MAE AND FILL OUT A STANDARD APPRAISAL FORM USING THOSE NUMBERS. BANKS WON’T FINANCE BECAUSE THE APPRAISALS COME IN SUBSTANTIALLY LOWER THAN THE BANKS REQUIRED 80% LOAN OF THE APPRAISED VALUE. IT’S RIDICULOUS, READING THE MONTHLY NEW HOUSING AND EXISTING HOUSING REPORTS PUBLISHED BY THE FEDS. THEY SHOULD JUST PULISH THIS EVERY MONTH: NO ONE CAN SELL THEIR HOUSE , EVEN THOUGH RATES ARE LOWEST EVER IN HISTORY… BANKS CAN’T MAKE MONEY AT THAT RATE…SO THIS MONTH THE BANKS WILL POINT TO THE APPRAISERS….AND BLAME THE APPRAISERS…”THEY APPRAISE EVERYTHING SO MUCH LOWER THAN THE SALE PRICE THAT THE SALE CAN’T CLOSE” AND…NO ONE HAS THAT MUCH CASH TO MAKE UP THE DIFFERENCE. THE OWNER SAYS, ” WELL, I GUESS THE DEAL FELL THROUGH AGAIN”….THE BUYER SAYS , “LETS GET ANOTHER APPRAISAL AND THE BANK SAYS OH NO…THAT’S AGAINST THE RULES.” SO THE BUYER SAYS I GUESS I CAN’T BUY.” THE FEDS REPORT SAYS “HOUSING SALESTHIS MONTH ARE FLAT AGAIN , SAME AS THE LAST 48 MONTHS, NO ONE IN WASHINGTON UNDERSTANDS IT…..WE OFFER THE PEOPLE SUCH GREAT LOAN DEALS!”

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