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Under the Hood: What You Need to Know About HARP Mortgages

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The 2008 financial and housing crisis left millions of homeowners with a mortgage balance which exceeded the value of their home. Many of those ‘under water’ walked away from their homes while others decided to stay. In response, the federal government created the Home Affordable Refinance Program, or HARP. Although HARP was created in March 2009, there may be millions who qualify but have not applied or have been turned down. 

What is H.A.R.P.?

HARP is a program designed to help homeowners refinance their under-water mortgage with a lower interest rate and reduce their monthly costs. HARP will also convert your adjustable rate mortgage into a fixed rate mortgage, locking in a low rate for the life of the loan. The really good news is that an appraisal is usually not required. 

A little over two years after HARP was introduced, fewer than one million borrowers had refinanced. This was well short of the four to five million projected by the Treasury Department and the Federal Housing Finance Agency (FHFA).

As a result, HARP 2.0 was launched. Less than two years later, about 2.4 million HARP refinances had been completed. HARP 2.0 contained some important changes which helped the program gain acceptance and helped millions of homeowners remain in their homes. For example, the original program had a 125% under-water limit. If the mortgage was greater than 125% of the value of the home, the homeowner didn’t qualify. The new program has no limit. The appraisal requirement was also relaxed.

Now, most homeowners will not need an appraisal. HARP 2.0 also includes modified fees and less paperwork. In addition, the deadline was extended to December 31, 2015. Now let’s turn our attention to the qualifications. 

How Do You Qualify?

As mentioned, the original program launched in 2009. However, the revised version makes it much easier to qualify. Here is a list of qualifications: 

1) The mortgage must be current with no late payments over 30 days in the past six months and no more than one late payment in the past 12 months.

2) The home must be the primary residence, a one-unit second home, or a one-to-four-unit investment property.

3) The current loan must be owned by Fannie Mae or Freddie Mac.

4) The current loan must have been originated on or before May 31, 2009.

5) The current loan-to-value ratio must be greater than 80%. 

If your current mortgage is an FHA, VA or a jumbo loan, you will not qualify for HARP. However, if you have an FHA mortgage which is underwater, you may be eligible to refinance through the FHA Streamline Refinance program. If you are under water with a VA loan, you may be able to refinance through the VA Streamline Refinance program. 

The Steps to Refinance

There are three steps required to refinance your mortgage through HARP. If you qualify, you’ll complete an application and go through an approval process and closing just as you would with a regular refinance. Here are the specific steps of the process: 

1) Gather Your Financial Information

Gather the information on your existing loan. You’ll also need mortgage statements (including the second mortgage if applicable) and a paycheck stub or recent income tax return. 

2) Contact Your Mortgage Company

The mortgage company must be an approved HARP lender. If not, you will need to contact a HARP lender to continue. If the lender says you do not qualify and you believe you do, ask to speak with the company’s HARP specialist or call another lender. 

3) Go Through the Application, Approval and Closing Process

This step is the same as with any refinance. You’ll work with the lender to provide what they need and, after you’ve been approved, you’ll attend the closing. 

Beware of HARP Scams

As is common with any federal program designed to help those in financial distress, there will be scam artists trying to deceive people into believing they work with a legitimate HARP lender. Here are some steps you can take to help avoid scams.

1) If they ask you to pay a fee for their counseling, it’s probably a scam. HARP assistance is free. 

2) If you feel pressured to sign the paperwork or they try to convince you to sign over the deed to your house (in deed states), it’s probably a scam. 

3) Never sign over the deed to your home unless you’re working with a reputable mortgage company to forgive your debt. 

4) Don’t make a mortgage payment to anyone other than your mortgage company without your mortgage company’s approval. 


Perhaps the greatest hindrance to this program is a lack of knowledge among borrowers. Given the elimination of the underwater percentage restriction and the relaxed qualifications, it seems that this program is poised to gain in popularity. Based on the estimates mentioned earlier in the article, there may still be a few million homeowners that qualify but haven’t tried. Many people become attached to their home for sentimental reasons. The HARP program may be just the thing to help them keep it. 

To learn more, visit the government’s HARP site.