If you are a homeowner who has been making mortgage payments and you now find your home’s value is less than what you owe on your balance, you may benefit from a mortgage refinance.
Changes to the Home Affordable Refinance Program (HARP), which has provided opportunities to responsible homeowners, are being implemented by the Federal Housing Finance Agency (FHFA) to reach more eligible borrowers who are repaying mortgages with little or no home equity.
The program is designed for borrowers whose loans are owned or guaranteed by Fannie Mae and Freddie Mac prior to May 31, 2009 and with present loan-to-value (LTV) ratios at 80% or higher. The program has been extended through the end of 2013.
Of the 9 million families that have already refinanced their mortgages through Fannie Mae and Freddie Mac, almost 900,000 have done so through HARP.
The specific changes made to HARP by the FHFA to increase its effectiveness include:
- the ending of some risk-based fees for those borrowers who modify their mortgages into shorter-term mortgages, and fee reductions for other borrowers
- the removal of the LTV ceiling of 125% that applies to fixed-rate mortgages guaranteed by Fannie Mae and Freddie Mac
- for cases where Fannie Mae or Freddie Mac have provided a reliable automated valuation model (AVM) estimate on a property, no additional appraisal will be required.
Borrowers can also capitalize on the low interest rates of today to refinance their loans and make their payments much faster.
Mortgage lenders should be receiving guidance from Fannie and Freddie detailing the revisions to HARP no later than November 15. HARP participation is voluntary, so the time it takes to put the program changes into effect will vary by lender.
Edward J. DeMarco, Acting Director, FHFA:
“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach…Building on the industry’s experience with HARP over the last two years, we have identified several changes that will make the program accessible to more borrowers with mortgages owned or guaranteed by the Enterprises. Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”
