HARP is extended through September 2017

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High loan-to-value refi option also offered

The Federal Housing Finance Agency (FHFA) announced that its Home Affordable Refinance Program (HARP), originally scheduled to run out at the end of this year, will be extended through the end of September 2017.

Despite the program being utilized by over 3.4 million borrowers since early 2009, there are still several hundred thousand eligible borrowers not utilizing it, the FHFA report stated,

“There are still more than 323,000 U.S. borrowers eligible for the program who have a financial incentive to refinance, as of the first quarter of 2016. These so called ‘in-the-money’ borrowers meet the basic HARP eligibility requirements, have a remaining balance of $50,000 or more on their mortgage, have a remaining term on their loan of greater than 10 years, and their mortgage interest rate is at least 1.5 percent higher than current market rates.”

HARP was started to help borrowers refinance with low interest loans. In order to be eligible for the program, they must be current on their mortgage payments, and have little or no equity. According to FHFA, borrowers can save about $2,400 a year on mortgage payments with HARP. Atlanta, Chicago, Detroit, Miami, Newark and Phoenix have large numbers of eligible borrowers that the FHFA is targeting through webinars and social media campaigns to inform about HARP.

Also, the FHFA announced that Fannie Mae and Freddie Mac will implement a refinancing option for borrowers with high loan-to-value (LTV) ratios. Just as in HARP, the new high LTV refinancing option will not require borrowers to get an appraisal, have a minimum credit score and have a maximum debt-to-income ratio or maximum LTV.

Borrowers can use the high LTV refinancing option more than once to refinance, unlike HARP, which has eligibility cutoff dates. The FHFA noted that borrowers with existing HARP loans will not be eligible for the new option until they have refinanced out of HARP using one of the GSE traditional refinance products.

“We are pleased to move forward with a new streamlined refinance option scheduled for October 2017,” said Andrew Bon Salle, EVP, Single-Family Business with Fannie Mae. “Aimed at borrowers with high loan-to-value (LTV) ratios, the new option builds on the successes of the Home Affordable Refinance Program (HARP) and will provide sustainable refinance opportunities to borrowers with existing Fannie Mae mortgages who are making their mortgage payments on time.”

Here are the eligibility requirements for Fannie Mae and Freddie Mac.

Freddie Mac eligibility requirements:

  • Only an existing Freddie Mac mortgage may be refinanced to a new Freddie Mac mortgage.
  • The LTV for the new mortgage must exceed the maximum LTV limit for a Freddie Mac No Cash-out Refinance Mortgage.
  • At least 12 monthly payments must have been made on the mortgage being refinanced since its acquisition by Freddie Mac.
  • Borrowers must be current with their payments and have:
  • No 30-day delinquencies in the most recent six months
  • No more than one 30-day delinquency in the past 12 months.
  • The mortgage being refinanced must not have been previously delivered as a Freddie Mac Relief Refinance Mortgage.
  • Borrowers can refinance, using the high LTV refinance offering, more than once as long as all other requirements including seasoning are met.
  • Mortgage insurance can be transferred to the new loan. If MI is not in place for the loan being 
refinanced, it is not required for the new loan if all other eligibility requirements are met.

Fannie Mae eligibility requirements:

  • Only an existing Fannie Mae mortgage may be refinanced to a new Fannie Mae mortgage.
  • The LTV for the new mortgage must exceed the maximum LTV for a Fannie Mae limited cash-out refinance.
  • At least 12 monthly payments must have been made on the mortgage being refinanced since its acquisition by Fannie Mae.
  • Borrowers must be current with their payments and have:
  • No 30-day delinquencies in the most recent six months, and
  • No more than one 30-day delinquency in the past 12 months.
  • The mortgage being refinanced must not have been previously delivered as a Fannie Mae Refi Plus (Desktop Underwriter or manual) mortgage.
  • Borrowers can refinance, using the high LTV refinance options, more than once as long as all other requirements, including seasoning, are met.
  • Mortgage insurance can be transferred to the new loan. If MI is not in place for the loan being refinanced, it is not required for the new loan if all other eligibility requirements are met. The FHFA says this new refinancing option will take the lessons learned from HARP and its streamlined refinancing method.

 

HARP FAQs

 

Sources:

Federal Housing Finance Agency. FHFA Announces New Streamlined Refinance Offering for High LTV Borrowers: HARP Extended through September 2017

DS News. HARP Extended; FHFA Offers High LTV Refi Option

HousingWire. HARP extended into 2017; FHFA plans new refinance program

PEMCO Limited. FHFA Extends HARP and Offers High LTV Refinancing Option

 

 

Written by Ari Meier

 

 

 

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