Editor’s Note: The HARP program expired December 31, 2018, and a popular replacement option, the Freddie Mac Enhanced Relief Refinance (FMERR) loan expired September 30, 2019.
However, Fannie Mae’s High LTV Refinance Option (HLRO) currently has no expiration date. Similar to HARP and FMERR, it’s a great loan option for underwater homeowners who don’t have enough equity earned in their home to qualify for a refinance.
MyMortgageInsider asked loan officer Chris Allen (Lic# MLO-97896) of Cobalt Mortgage in Kirkland, Washington all about the popular Home Affordable Refinance Program (HARP).
MMI: Hi Chris, almost everyone has heard of the HARP 2.0 loan. What’s the #1 most important aspect of the HARP refinance that benefits borrowers?
Chris: The #1 most important benefit this program offers is that if will allow the borrower to refinance the current loan and take advantage of historical low rates even if they are upside down on the their mortgage.
MMI: What are some of the main requirements for someone to qualify for a HARP refinance?
Chris: In order to be eligible for a HARP refinance, the current loan must have funded and recorded prior to May 31st, 2009. It also has to be owned by Fannie Mae or Freddie Mac.
MMI: How does someone find out if their loan is owned by Fannie Mae or Freddie Mac?
Chris: You can look up the loan on Fannie Mae’s or Freddie Mac’s website.
MMI: If someone makes their monthly payment to Wells Fargo or Chase, for instance, does that mean their loan is held by these companies and not Fannie or Freddie?
Chris: Not necessarily. Often times Fannie Mae or Freddie Mac own the loan and the bank that you make your payment to is just the servicer of your loan.
MMI: Does the current servicer of the loan have to do the HARP refinance, or can any lender take an application for a HARP?
Chris: You do not have to refinance the loan with the same lender. Any Fannie Mae- or Freddie Mac-approved lender can take an application for a HARP 2.0 loan.
MMI: If someone is late on their mortgage, are they eligible for a HARP?
Chris: Well, they have to have no payments that were more than 30 days late in the last 6 months. They are allowed 1 late payment between 7 and 12 months prior.
MMI: Is it possible to qualify for a HARP loan without an appraisal?
Chris: Yes, I have seen a lot of HARP loans that do not require an appraisal. Depending on your estimated value, appraisal waivers are granted from both Fannie Mae and Freddie Mac. The lender will run the borrower’s information through a computer system to determine eligibility for the appraisal waiver.
MMI: Are HARP interest rates comparable to standard conventional refinance rates?
Chris: Yes, depending on your credit score and loan amount compared to the home’s value, or loan-to-value (LTV), interest rates may be the same.
MMI: Does a borrower have to have good credit to qualify for HARP?
Chris: The HARP program requires a 620 minimum credit score depending on your LTV.
MMI: Does a HARP refinance require a borrower to pay mortgage insurance on the new loan?
Chris: If you qualify for the HARP program you will not need mortgage insurance as long as your current loan does not have mortgage insurance.
MMI: If someone has a second mortgage, and their first mortgage is HARP-eligible, can they refinance?
Chris: Yes you can do a rate and term refinance, also called a no cash-out refinance, on the first mortgage as long as the second lien holder is willing to re subordinate the second lien on the property. Subordinating just means that the second mortgage lender agrees to put their loan in second position behind the new first mortgage.
MMI: Does the HARP program have an end date?
Chris: Yes, December 31st, 2013 as of right now. It remains to be seen if it will be extended by Congress.
Chris Allen is a licensed loan originator with Cobalt Mortgage (NMLS-35653, WA #520-CL-48866) in Bellevue, Washington. Chris is a former pro golfer, touring the US and Canada from 2000-2002. He has been in the mortgage business for over 9 years.