New Mortgage Refi Options for Underwater Homeowners

The Home Affordable Refinance Program (HARP) was put into place in 2009 however, the guidelines where nearly impossible for borrowers to qualify for. There are several important changes made to the program which will help homeowners stay in their homes.

  • The revised program will eliminate the 125% loan-to-value
  • Mortgages backed by Fannie and/or Freddie Mac and originally sold to the GSE’s on or before May 31st 2009 are eligible for the new refinance program
  • There will no longer be a requirement to have 20% equity in the home
  • Fannie Mae and Freddie Mac have removed the requirement for a new appraisal
  • Must be current on mortgage payment
  • HARP program has been extended from June 30, 2012 through December 31, 2013

The new changes are expected to go into effect by December 1st. It is estimated that 1 million homeowners will be able to take advantage of this new program. Officials believe by opening the HARP program up to more underwater homeowners with increased negative equity, it will help prevent future foreclosures, which has been a primary motivation for “strategic defaults.”

“We anticipate that the package of improvements being made to HARP will reduce the Enterprises credit risk, bring greater stability to mortgage markets, and reduce foreclosure risks,” FHFA stated in its announcement Monday.

Michael J. Williams, Fannie Mae’s president and CEO, called the program a “welcome development.”

“By removing some of the impediments to refinance, lenders can more easily participate in the program allowing more eligible homeowners to take advantage of the low interest rates,” Williams stated.

Charles E. Haldeman, Jr., CEO of Freddie Mac said, “These changes mark another step on the road to recovery for the nation’s housing market.”

If you would like to learn more about your home values or need more information on whether or not you have a Fannie Mae or Freddie Mac loan, please contact us today. or 602-864-1200.

Source: DS