Fannie Mae and Freddie Mac will announce changes in their Home Affordable Refinance Program, or HARP. It is expected to put a great deal of weight on lenders voluntarily writing new loans for borrowers who have been hurt by declining home prices. The Federal Housing Finance Agency (FHFA), the programs regulators, have said changes will relax the representations and warranties participating lenders have to abide by as part of its revamp of the program.
The HARP program is available to homeowners who have little or no equity in the homes as long as Fannie Mae and Freddie Mac guarantee their loan and their payments have been made on time. Fannie Mae and Freddie Mac back about half of all U.S. residential loans and, according to analysts, about 3.1 million loans. In October, FHFA said it would remove the cap that excluded borrowers whose mortgages exceed 125 percent of the value of their homes from the program.
To date, about 894,000 borrowers have used HARP to refinance.
Some great features of The Harp Loan Program mortgage refinance are:
■ Generally lower closing costs
■ Generally more lenient underwriting
■ Appraisal is sometimes not required
■ A loan under the Harp Loan Program can get the same low rates that conventional loans qualifying for a conventional refinance transaction would get. This includes adjustments for credit score, type of property, etc.
■ If your loan is owned by Freddie Mac, you may not be required to prove income.
NOTE: If your loan is owned by Freddie, you will have to do your mortgage refinance through your current loan servicer. However, Fannie loans can be done by any Harp lender who offers the harp loan program.
■ NO MORTGAGE INSURANCE (even if you owe more than the house is worth)
■ With a Fannie loan, all your closing costs can be included in the mortgage, so, except for a credit report fee and appraisal fee (if required), this loan does not require cash up front.
The Harp loan program could really help homeowners who are facing difficulties to meet their monthly mortgage payments. Search for a Harp lender who offers the harp loan program in your neighborhood and find out if you are eligible.
