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Trying to Refinance a Mortgage? HARP 2 Might Be the Answer

Before the housing bubble burst, many people achieved the American dream of home ownership. However, the way in which these dreams became a reality wasn’t always ideal, as unknowing consumers accepted risky mortgage structures or even mortgages they ultimately couldn’t afford. So when the economy tumbled and millions watched their home values similarly plummet, many people missed making their mortgage payments or simply struggled to find the money needed to make those payments on time.

Spring-forward to today, where several government-backed programs aim to keep more Americans in their homes. From refinancing and altering mortgage terms to accessing today’s historically low interest rates, help may be available. But what if, in your quest for help, you’ve come up empty? What if you’ve been told you don’t qualify for refinancing or other loan modifications because you recently lost your job or are underwater on your mortgage, meaning your mortgage balance is higher than the current value of your home?

Well, here’s some good news. If your loan is backed by Fannie Mae or Freddie Mac, a specialty, one-time-use-only loan program called HARP 2 could help you lower your monthly mortgage payment. First announced in 2009, The Home Affordable Refinance Program (HARP) was designed to help responsible borrowers reduce their interest rates, which would decrease their monthly principal and interest payments. The program also aimed to transfer homeowners with risky loan structures (e.g., short-term adjustable rate or interest-only mortgages) to more stable structures (e.g., fixed-rate mortgages).

In late 2011, the federal government announced it was loosening HARP’s eligibility requirements, enabling more mortgagees to benefit. Renamed as “HARP 2” and also “Making Home Affordable,” the program offers qualifying homeowners the opportunity to refinance with the following benefits:

  • No mortgage insurance
  • Lower closing costs
  • More lenient underwriting
  • Often, no property assessments

Eligibility Requirements

Struggling homeowners with Fannie Mae or Freddie Mac loans can pre-qualify for HARP 2 if they close on a new mortgage before January 1, 2014, and meet the following criteria:

  • Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac. You can enter your address information on the respective websites listed in this bullet point to check whether either of these organizations has your mortgage.
  • Your mortgage must have been sold to Fannie Mae or Freddie Mac before May 31, 2009.
  • Your mortgage must have a current loan-to-value (LTV) ratio higher than 80%. As a simple example, assume that your mortgage balance is $90,000 and your home is currently worth $100,000. In this example, the LTV is 90% and fits HARP 2’s LTV criteria.
  • You must have made your last six consecutive mortgage payments, as well as the last 11 out of 12 payments, on time.
  • You cannot be in the process of foreclosure. HARP 2 is meant to help homeowners refinance only; it can’t stop or delay foreclosure proceedings.

Note that even if you meet these criteria, eligibility isn’t automatic; there are additional conditions you must meet. Your lender can provide more specific details pertinent to your situation. Just remember that the interest rates offered by different lenders will likely vary. Shop around and compare the rates and costs with multiple, reputable companies to make sure you’re getting the best refinancing terms.

And if you wonder whether you can refinance if you’re currently participating in a CareOne Debt Relief Plan, the answer is yes, at least on our end. Ultimately, your mortgage lender will determine your eligibility for HARP 2 based on your overall financial profile. However, your decision to refinance your mortgage will have no impact on your CareOne Debt Relief Plan. Talk to your CareOne debt counselor and your lender for further information.

Read more about the HARP 2 program and other government-sponsored home assistance programs at MakingHomeAffordable.gov. You can also call the Homeowner’s HOPE HotlineTM at 1-888-995-HOPE (4673). Place that call, and a U.S. Department of Housing and Urban Development-approved counselor can connect you to a housing counselor in your community or even contact your lender or servicer for you.

Finally, if a different organization other than Fannie Mae or Freddie Mac has your mortgage, you won’t qualify for the HARP 2 program, but you can still try to refinance by contacting your lender or another qualified loan servicer. Just be sure to shop around for the best deal, so you have your best chance to keep your home.


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