Explaining Plan B: HARP 2.0

HARP 1.0 was introduced in April 2009 by The Federal Housing Finance Agency (FHFA) and the Department of the Treasury. It was part of the Obama Administration’s Making Home Affordable program. It provided an option to borrowers who might not qualify for refinancing due to declining home values or reduced access to mortgage rates. In some cases, borrowers could refinance up to 125% of their mortgage into a lower interest rate and/or more stable mortgage product.

Borrowers who are underwater, and owe more than their home is worth, can utilize FHA Streamline or HARP to take advantage of low interest rates and other refinancing benefits. Nearly 894,000 borrowers had refinanced through HARP as of August 11, 2011. However, there are still many more homeowners that need help.

HARP 2.0 is designed to increase the number of homeowners who are able to refinance through this program. With the enhanced HARP 2.0, borrowers must meet the following criteria:

·         The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:

http://www.FannieMae.com/loanlookup/ or calling 800-7FANNIE (8 a.m. to 8 p.m. ET)

https://ww3.FreddieMac.com/corporate/ or 800-FREDDIE (8 a.m. to 8 p.m. ET)

·         The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.

·         The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.

·         The current loan-to-value (LTV) ratio must be greater than 80%.

·         The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

Based on these criteria, the FHFA estimates that there are 4 million loans that are eligible for refinance through the revised program. It is estimated that HARP 2.0 will be available by mortgage lenders in the first quarter of 2012.