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July 28, 2014

Ripe for HARP

Paul Mullings
Paul Mullings, SVP Single-Family Strategic Business Initiatives

Have you HARPed?

A large number of eligible homeowners – who could save thousands of dollars a year on their mortgage payments – have yet to refinance through the federal Home Affordable Refinance Program (HARP). And the clock is gradually running out.

Nearly 3.2 million borrowers nationwide had refinanced through HARP as of April 2014, significantly lowering their monthly mortgage payments, lowering their interest rate, and/or switching to a shorter-term loan.  On average, homeowners who refinance through HARP are saving nearly $200 per month. That's more than $2,000 a year – a significant amount of money for any family and the equivalent of a getting a raise or gaining another new source of disposable income.

And these families have earned it.  Through a HARP refinance, they're in effect getting paid for the way they've continued to manage their monthly mortgage payments throughout the housing crisis.

But the Federal Housing Finance Agency (FHFA) estimates that as many as 800,000 borrowers who are "in the money" – that is, they meet the general HARP eligibility requirements, owe $50,000 or more on their mortgage, and pay an interest rate that's at least 1.5 percent higher than current rates – have so far stayed on the sidelines. As a reminder, HARP allows for homeowners who owe more on their mortgages than their homes are worth to also avail themselves of this refinance opportunity.

FHFA recently brought together housing experts, local community leaders, elected officials, and lenders in Chicago to ask for their help in spreading the word that HARP offers real benefits for borrowers. FHFA Director Mel Watt kicked off the event, and I took part in the lively panel discussion that followed. Chicago was highlighted because the city was among the areas hit hardest by the housing crisis. More than 36,000 borrowers in the Chicago metropolitan area alone are eligible for HARP but haven’t taken action.

If HARP is such a good deal, why have so many eligible homeowners not refinanced? Many tell us that the potential savings sound too good to be true. It’s got to be a scam, they say. Director Watt urged the housing community – our trusted intermediaries who know the local neighborhoods because that’s their home base, too – to help spread the word that those who are eligible for HARP should make the most of this opportunity.

"[HARP] has been on the books since 2009, and we have had tremendous success, but we're down to the people who still don’t believe this is a credible program. And we need your help to deliver the message to them that it is," Watt said.

But don't delay. HARP is scheduled to expire on December 31, 2015, so that window will be closing. On top of that, our economists are projecting interest rates to rise between now and the end of the year, which will make refinancing less attractive for some borrowers.


If you can answer "YES" to all of these questions, you should contact your existing servicer or any participating lender and ask about a HARP refinance.

  • Does Freddie Mac or Fannie Mae own or back your mortgage? Check here.
  • Was your mortgage originated on or before May 31, 2009?
  • Are you underwater, or have a current loan-to-value ratio greater than 80 percent?
  • Are you current on your mortgage payment?
  • Is your recent mortgage payment history good? That is, you don’t have any 30-day+ late payments in the past six months and no more than one late payment in the past 12 months?
  • Is your home your primary residence, second home, or investment property?

HARP is now open to more borrowers than ever before, so even if you applied for a refinance earlier in the program's history and were turned down, you should check it out again.

Visit here for more information about getting started with HARP

*Paul Mullings left his position with Freddie Mac in June 2015.

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