Home Affordable Refinance Program (HARP)

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What is the Affordable Home Refinance Program (HARP)

The Home Affordable Refinance Program, or HARP, is a program offered by the Federal Housing Finance Agency to homeowners who own homes whose value is less than the outstanding loan balance. The program is specifically aimed at borrowers who would benefit from the currently lower interest rates.

FAILURE Affordable Home Refinancing Program (HARP)

The Home Affordable Refinance Program (HARP) refinancing is only available for mortgages that are currently guaranteed by Freddie Mac or Fannie Mae, or that were sold to either of these entities before May 31, 2009.

Because of the impact of the 2008 financial crisis and its effect on the value of real estate in the United States, many homeowners found themselves upside down or underwater on their home loans. Upside down or underwater are used to describe cases where a borrower owes more on a loan than the present value of the collateral against which it is secured. In the case of a mortgage, the collateral is the property. The federal government launched HARP in 2009 to try to slow the foreclosure rate and help borrowers who had benefited from subprime lending practices.

The program is only available to eligible borrowers. They must be up to date on their mortgage payments and the property must be in good condition. Borrowers who have already defaulted or who have left their properties are not eligible for the program. Any participating lender can help a borrower refinance HARP. Borrowers do not need to go through their current lender.

The program is scheduled to end on December 31, 2020.

Difference between HARP and a modification

Another program that has been deployed to stem the flow of foreclosures after the market crash is called a mortgage modification. Unlike HARP refinances, these programs were intended for borrowers who had already defaulted on their loan, or for whom the default was imminent.

A modification can only be obtained through the existing lender, and each lender has its own qualification requirements. Although the process of changing a mortgage changes the terms of a mortgage note, it is not the same as refinancing. Sometimes changes can signal in the borrower’s credit report that the mortgage terms have been changed. In some cases, the changes may affect future creditworthiness. Some borrowers may also face an additional tax liability, as the terms of their modification may include the cancellation of part of the debt owed, which the Internal Revenue Service may consider as earned income. Anyone considering a mortgage modification should consult a licensed tax professional to determine their potential additional liabilities.

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