In 2009, the government rolled out the Home Affordable Refinance Program (HARP). The program is meant to help those who are underwater on their mortgages refinance into a more affordable monthly payment.

Unfortunately, some of the requirements for participation in the program limited its effectiveness.

In order to expand the program so that it reaches more homeowners, some changes have recently been made to HARP.

Main Changes to HARP



There are a few main changes to HARP that widen the eligibility requirements. The main changes should help borrowers who weren’t eligible in the past find themselves able to refinance to today’s record low interest rates, thereby reducing their monthly payments.

Some of the major changes include:

Cut fees to borrowers : In some cases, fees charged to borrowers who wanted to refinance to shorter-term loans were higher than expected. The changes to the program cut those fees, making it more affordable for those who want shorter-term mortgages to refinance.

: In some cases, fees charged to borrowers who wanted to refinance to shorter-term loans were higher than expected. The changes to the program cut those fees, making it more affordable for those who want shorter-term mortgages to refinance. 125% cap removed : Before, if a borrower owed more than 125% of the value of the home, he or she was ineligible for HARP. Now, though, that cap has been removed so that people who are underwater by more can take advantage of HARP (as long as they meet other requirements.)

: Before, if a borrower owed more than 125% of the value of the home, he or she was ineligible for HARP. Now, though, that cap has been removed so that people who are underwater by more can take advantage of HARP (as long as they meet other requirements.) Mortgage payment delinquency : Instead of having never missed payments on the mortgage, it is allowable to refinance under HARP with only one missed payment in the last 12 months, as long as there have been no missed payments in the last six months.

: Instead of having never missed payments on the mortgage, it is allowable to refinance under HARP with only one missed payment in the last 12 months, as long as there have been no missed payments in the last six months. Warranty risk : For lenders, some changes have been made in order to induce them to be more favorable toward offering refinancing under HARP. Freddie Mac and Fannie Mae will clear banks from the warranty risk and rep liability that come with marketability, condition, and valuation of the underlying property (unless the lender gets a new appraisal for the HARP refinance).

: For lenders, some changes have been made in order to induce them to be more favorable toward offering refinancing under HARP. Freddie Mac and Fannie Mae will clear banks from the warranty risk and rep liability that come with marketability, condition, and valuation of the underlying property (unless the lender gets a new appraisal for the HARP refinance). Program extension: The HARP program has been extended through December 21, 2013, so borrowers have time to meet eligibility requirements with regard to payments.

HARP Eligibility

As you might expect, though, there are still some eligibility requirements when it comes to HARP.

First of all, your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac. This situation must be in effect on or before May 31, 2009.