Photo credit: Apple Realty
Extended through next September and reaching out to more than 300,000 eligible borrowers
The Federal Housing Finance Agency (FHFA) announced that its Home Affordable Refinance Program (HARP), originally scheduled to run out at the end of this year, will be extended through September 30, 2017.
FHFA found there are a few 100,000 borrowers eligible to refinance through HARP, but who haven’t joined the roughly 3.42 million borrowers that’s utilized the program since its launch in early 2009.
“There are still more than 323,000 U.S. borrowers eligible for the program who have a financial incentive to refinance, as of the first quarter of 2016,” FHFA stated in its report. “These so called ‘in-the-money’ borrowers meet the basic HARP eligibility requirements, have a remaining balance of $50,000 or more on their mortgage, have a remaining term on their loan of greater than 10 years, and their mortgage interest rate is at least 1.5 percent higher than current market rates.”
HARP was launched as a way to help borrowers who are current on their mortgage payments and had no or little equity, refinance with low interest loans. FHFA originally scheduled HARP to expire at the end of 2011, but it was given life to the end of 2013, then extended until the end of 2015.
Borrowers can save an estimated $2,400 per year on mortgage payments by refinancing through HARP, according to FHFA. In cities where there are large numbers of eligible borrowers, FHFA has reached out to these borrowers via social media campaigns, webinars and websites. The targeted cities are Atlanta, Chicago, Detroit, Miami, Newark and Phoenix.
Also, the FHFA announced that Fannie Mae and Freddie Mac, at the direction of the Agency, will implement a refinancing option for borrowers with high loan-to-value (LTV) ratios.
FHFA Director Melvin L. Watt said, “Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the Enterprises. This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”
Just as in HARP, the new high LTV refinancing option will not subject borrowers to a minimum credit score requirement, an appraisal will often not be required and there is no maximum debt-to-income ratio or maximum LTV. Borrowers can use the high LTV refinancing option more than once to refinance, unlike HARP, which has eligibility cutoff dates. The FHFA noted that borrowers with existing HARP loans will not be eligible for the new option until they have refinanced out of HARP using one of the GSE traditional refinance products.
“We are pleased to move forward with a new streamlined refinance option scheduled for October 2017,” said Andrew Bon Salle, EVP, Single-Family Business with Fannie Mae. “Aimed at borrowers with high loan-to-value (LTV) ratios, the new option builds on the successes of the Home Affordable Refinance Program (HARP) and will provide sustainable refinance opportunities to borrowers with existing Fannie Mae mortgages who are making their mortgage payments on time. At the direction of the Federal Housing Finance Agency (FHFA), Fannie Mae will continue to offer HARP through September 30, 2017 to ensure that eligible borrowers can take advantage of the existing HARP program. We look forward to working with FHFA and Freddie Mac to provide needed liquidity so eligible homeowners can take advantage of low interest rates and refinance into more affordable mortgages.”
Dave Lowman, EVP, Single-Family Business at Freddie Mac, said, “Our forthcoming high loan-to-value (LTV) offering, which is scheduled to be available in October 2017, will allow eligible borrowers to refinance into more affordable and sustainable mortgages as interest rates continue to be at historic lows. We expect to carry through many of the most successful features of the Home Affordable Refinance Program (HARP), including its streamlined documentation requirements. In the interim, at the direction of the Federal Housing Finance Agency (FHFA), both Freddie Mac and Fannie Mae will continue to offer HARP through Sept. 30, 2017. We look forward to working with the FHFA and Fannie Mae to continue providing liquidity in the market and supporting American homeowners.”
Here are the eligibility requirements for Fannie Mae and Freddie Mac.
Freddie Mac eligibility requirements:
Fannie Mae eligibility requirements:
acquisition by Fannie Mae.
Sources:
Federal Housing Finance Agency. FHFA Announces New Streamlined Refinance Offering for High LTV Borrowers: HARP Extended through September 2017
DS News. HARP Extended; FHFA Offers High LTV Refi Option
HousingWire. HARP extended into 2017; FHFA plans new refinance program