Among the proverbs attributed to King Solomon are many expressing the importance of dealing fairly with people and helping the less fortunate. That way, says Solomon, leads to rewards: “A merciful man doesth good to his own soul . . . to him that soweth justice, her is a faithful reward.” (Proverbs 11: 17-18). Today, in the wake of the massive housing crisis of a few years ago, efforts to help struggling homeowners and even independent investors manage mortgages yield rewards for the housing market as a whole. HARP (Home Affordable Refinance Program) is one of those efforts, a government supported refinancing program begun in 2009 that’s being expanded to assist more mortgage holders in 2012 and beyond.
First started in 2009, HARP, also called the Making Home Affordable plan, the Obama Refi Plan, or Relief Refinance, allows property owners to refinance their properties without paying down the principal and having to pay mortgage insurance. Originally intended to help homeowners in danger of going “underwater” on their primary residence, the provisions of HARP’s latest version, known as HARP 2.0, are also available to individual investors.
In order to qualify for HARP refinancing help, a property owner must simply meet two basic criteria. The mortgage must have a securitization date prior to June 1, 2009, and it must be backed by either Fannie Mae or Freddie Mac, the government’s two mortgage superagencies. Whether a property is used for a primary residence, a second home, or a rental property, it can be refinanced under the terms of HARP as long as these two conditions are met.
The primary mortgage type supported by HARP is the 30-year fixed rate mortgage recommended by Jason Hartman for income properties. Although adjusted rate mortgages (ARMs) may also qualify under some circumstances, the program doesn’t work with jumbo mortgages or specialized types such as Alt-A or subprime mortgages. Also, mortgage payments must be current in order to qualify.
Determining whether a mortgage is financed by either Fannie Mae or Freddie Mac can take some detective work. Many of these loans are ‘serviced” by secondary financial institutions such as Chase, Wells Fargo, or Bank of America – agencies that simply collect payments for loans backed by those government entities, rather than issuing loans of their own. Websites for Fannie Mae and Freddie Mac offer “lookup” forms that allow mortgage holders to track the origins of their loans.
Although loans backed by other government bodies such as the FHA, VA, or USDA aren’t eligible for HARP, some of these agencies have their own versions of the program. For example, the FHA offers the FHA Streamline Refinance program, with similar eligibility standards.
Since HARP, in its various incarnations, is intended to shore up the shaky housing industry and lower the rate of foreclosures and short sales, it’s likely to be around for a while. Talks are beginning in Congress about HARP 3.0 – an expanded version of the program that would include loan types not covered under HARP 2.0 and provide more options for both homeowners and investors. That’s a kind of mercy that King Solomon might understand. (Top image: Flickr | NicholasT)
The Solomon Success Team