The first wave of updates to the original Home Affordable Refinance Program® (HARP®) is set to expire. The program is only available until September 30, 2017, which means its advantages will not be pursued by underwater or near-underwater borrowers after that date.
Fortunately, there’s been more than just talk of a HARP 3.0, which aims to extend the program, with better benefits for many eligible American borrowers.
HARP Refi History
HARP or the Home Affordable Refinance Program was launched in March 2009 to cater to near-underwater borrowers who are current on their payments but at risk of foreclosure because of a sudden change in their financial state that could hamper continuity in payment. Remember that this was after the housing crisis and even though rates plummeted, many homeowners were not able to refi because of their high LTV. Because of this, the government made an incentive to waive certain LTV requisites, which became a saving grace for millions of crisis-stricken Americans.
In HARP 2.0 which was done in 2012, not only were LTV requirements waived but also proof of income, assets, credit scores, etc. Some lenders offering HARP 2.0 even waived certain appraisals. At its bare bottom, HARP 2.0 only required its borrowers to:
- have less than 20 percent home equity
- not have mortgage payment delinquencies for the last 6 mos.
- have a mortgage with a note date no later than May 31, 2009
- have a mortgage backed by Fannie Mae or Freddie Mac
So What’s New?
Under HARP 3.0, that last requirement, which alienated thousands of potential eligible borrowers, may also be waived, opening a gate of opportunity to an even larger audience – jumbo, as well as alt-A, and subprime loan carriers included. This is in line with the program’s goal to expand refinancing access, not just to Fannie Mae and Freddie Mac customers, but also to other borrowers locked-out by this limitation. In addition, other lawmakers are pushing for potential fee reductions and less documentations needed for qualification.
Who will be qualified?
There’s no telling when the bill will be passed so as to the qualifications, we can only confer nothing more than mere guesses. Here are the possible types of borrowers who might be eligible for HARP 3.0:
- an Alt-A mortgage borrower
- an employed individual who obtained mortgage via stated-income or asset loans
- a self-employed individual who obtained his or her original mortgage through income-stated loans but can still prove income receipt through other means such as via tax documentations
- a jumbo mortgage carrier
- a prime borrower who used a subprime mortgage owing to the difference in rates when he or she first got the loan
- an individual with a bad credit score and thus carries a subprime mortgage but is able to verify his or her income and assets
The potential HARP 3.0 is currently known as Senate Bill 3085 with the title Responsible Homeowners Refinancing Act of 2012. Its purpose reads: “To provide for the expansion of affordable refinancing of mortgages held by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.” When approved, it will open an avenue of opportunities for millions of Americans to keep their mortgages while saving hundreds of dollars on their home loans.