Editor’s Note: The HARP program expired Dec. 31, 2018, but most homes have increased in value considerably since HARP rolled out. This means many homeowners may currently be eligible for a standard conventional refinance.
Check today's rates here and apply for a conventional refinance (Apr 24th, 2025)A program that looks very much like HARP 3.0 has been rolled out in the state of Oregon. Will the other 49 states follow this pioneer in offering underwater homeowners relief?
The “Merkley Mortgage” as it is commonly known, allows homeowners who owe more than their home is worth to refinance even if their loan is not owned by Fannie Mae and Freddie Mac. This program is now available in the entire state of Oregon, rolled out statewide earlier this year after being available in only three Oregon counties initially.
Removing the Fannie/Freddie requirement has kept millions nationwide from using the standard HARP 2.0 program. Simply too many have had no refinance options because they opened a subprime, Alt-A, or another portfolio loan during last decade’s loose lending spree. Oregon has changed all that, at least for their residents.
HARP 3.0 for Oregon residents only – for now
The official name of the program is Rebuilding American Homeownership Assistance Pilot Program, or RAHAPP. It was created by Oregon Senator Jeff Merkley, hence its nickname.
The loan program now allows homeowners to refinance if:
- Their property is in Oregon
- They are current on their mortgage
- They don’t own any other property
- They are underwater on their mortgage
- They can’t use HARP because their loan is not owned by Fannie Mae or Freddie Mac.
Homeowners can refinance into one of two options:
- A 15-year fixed loan at 4.0% with an APR of 4.129%
- A 30-year fixed loan at 5.0% with an APR of 5.077%
What a welcome relief to the many Oregon residents who were trapped in high-interest, predatory loans whipped up by banks in the 2000s.
Oregon first, the other 49 states next?
Senator Merkley had a brilliant idea: use funds allocated by the federal government, called Hardest Hit Funds. This money was set aside by Congress for states that experienced the greatest levels of housing depreciation.
So it begs the question, if Oregon can do it, why can’t other states that received Hardest Hit Fund (HHF) dollars roll out their own programs? Florida, California, and Arizona also received HHF money. It would be a logical next step if these states followed Oregon’s lead.
From there, if these programs are successful, we could see a national program available in all 50 states.
Congress needs proof HARP 3 will work
What better proof that a HARP 3 program is feasible than a real-world test in an entire state? If the Merkley Mortgage is profitable, or at least doesn’t lose money, it could be the proof that lawmakers need to pass a HARP 3 law.
And if four or five states implement successful programs, HARP 3 could be a slam dunk in Congress. We could even see a HARP 3 program in 2014.
Can you qualify for a program other than HARP 3?
Even though millions are waiting for HARP 3, many don’t know that they are eligible for the current program, HARP 2.0, or other programs. They could be saving money each month, because they were denied and have not tried again.
Values have risen upwards of 25% in some places during the past year. And with enough value, you don’t need HARP 3 to refinance. Here are some other options:
Conventional Refinance: Usually you need 15-20% equity to make a refinance worth it.
VA Cash Out Refinance: If you have military service, you don’t need any equity to refi.
Private Mortgage Insurance: Even if you obtain PMI, you can cancel it when your loan reaches 80% of the value.
These are just a few examples of loan types you can examine while waiting for HARP 3 to be implemented in all 50 states.
Qualify for the current HARP program
Many are eligible for HARP 2.0 but don’t it, and are patiently waiting for HARP 3.
The Fannie Mae and Freddie Mac lookup tools can be hard to use. Homeowners should contact a HARP-alternative lender and have them do the digging to see if their loan is owned by Fannie or Freddie.
If the loan is owned by one of these entities, the homeowner could be eligible for HARP right now.
