What is the Home Affordable Refinance Program (HARP)?
The Home Affordable Refinance Program (HARP) , a Federal Housing Finance Agency program, allowed homeowners with houses valued less than their loan total to refinance.
The 2008 financial crisis-relief program concluded. HARP aims to assist underwater and near-underwater homeowners in refinancing mortgages owing to declining prices. Underwater mortgage homeowners have choices once HARP terminates in December 2018. Underwater homeowners owe more than their home is worth.
Learning about HARP
In collaboration with Freddie Mac and Fannie Mae, the Home Affordable Refinancing Program (HARP) refinancing was only accessible for mortgages insured by these firms. Homeowners must have mortgages sold to either entity before May 31, 2009, to qualify for HARP.
The 2008 financial crisis caused many homeowners to go underwater on their house loans due to the impact on real estate values in the US. An upside-down or underwater loan is one where the borrower owes more than the collateral is worth.
Mortgages use property as collateral. In 2009, the federal government introduced HARP to reduce foreclosures and assist borrowers impacted by subprime lending.
The program was for qualifying borrowers only. Borrowers have to pay their mortgages on time and maintain the property. Borrowers who defaulted or left their properties were ineligible for the scheme. Any participating lender might help HARP refinance a borrower. Borrowers might bypass their lenders.
The program concluded on December 31, 2018.
Comparison between HARP and HAMP
Mortgage modifications were another post-market crisis attempt to reduce foreclosures. In 2016, HAMP expired before HARP. These programs were for borrowers who had defaulted or were about to default, unlike HARP refinances.
The existing lender had to approve a change, and each had its own qualifications. Although mortgage modification adjusts the conditions of a mortgage note, it is not refinancing.
Modifications may appear on the borrower’s credit report as mortgage conditions change. Changes may affect creditworthiness. Borrowers may incur higher taxes due to debt modification clauses that involve wiping down a portion of the loan, which the IRS may consider earned income.
Conclusion
- The Federal Housing Finance Agency provided the Home Affordable Refinance Program (HARP) to homeowners with homes valued less than their loan debt.
- The 2008 financial crisis-relief program concluded.
- Underwater mortgage homeowners have choices once HARP terminates in December 2018.
