The Home Affordable Refinance Program
(HARP) has been extended for two years beyond its scheduled expiration on
December 31. The Federal Housing Finance Agency (FHFA) announced the extension
today saying it had determined the extension will provide borrowers with additional opportunities to refinance, give clear guidance
to lenders, and reduce losses for Fannie Mae, Freddie Mac and taxpayers.
HARP is designed specifically
for current homeowners with mortgages owned or guaranteed by Freddie Mac or
Fannie Mae (the GSEs) and high loan-to-value (LTV) ratios which make it
difficult if not impossible to refinance through traditional programs. The majority of HARP borrowers are actually
underwater on their mortgages with the majority having LTVs in excess of 105
percent.
The program, which will now
expire on December 31, 2015, has assisted more than
2.2 million borrowers to refinance since its inception in April 2009, however
nearly half of those homeowners have accessed the program in the last 15
months. Loans through the program were
originally capped at an LTV of 105 percent which was raised to 125 percent
fairly early in the program's existence but it still did not assist as many
homeowners as had been anticipated. In
the fall of 2011 several revisions to the program were instituted including
elimination of any cap on the loan-to-value of the resulting loan. Since then use of the program has skyrocketed
and HARP loans have represented around one quarter of GSE refinancing for most of
2012.
"More than 2 million
homeowners have refinanced through HARP, proving it a useful tool for reducing
risk," said FHFA Acting Director Edward J. DeMarco. "We are extending the
program so more underwater borrowers can benefit from lower interest rates."
FHFA, which is
conservator of the GSEs, plans to launch a nationwide campaign to educate
consumers about HARP and its eligibility requirements and motivate them to
explore their options and utilize HARP before the program ends. FHFA said it could not provide hard estimates
of how many additional homeowners might be eligible for the program.
To qualify for a HARP
refinance a homeowner must be current or have had no more than one late payment
in the previous year on a loan that was sold to one of the GSEs prior to May
2009. The current LTV of the loan must
be greater than 80 percent.
Homeowners can
determine if they have a GSE owned or guaranteed loan by checking both websites
at www.fanniemae.com and www.freddiemac.com or by contacting their
servicer.