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Short Primer on the Home Affordable Refinance Program (HARP)

When the housing bubble burst and the economy tanked in 2008, many homeowners found themselves underwater, meaning that their homes were worth less than the amount they owed on their mortgages.

When this happens, it makes buying and selling more difficult. It also makes it difficult to refinance to lower interest rates. For some, refinancing an underwater home is not possible.

So the government created the Home Affordable Refinance Program, or HARP, which generally waived many of the requirements typically imposed by lenders before they'll agree to refinance.

According to blogger Dan Green with the Mortgage Reports, you can take advantage of a HARP refinance if you've got less than 20 percent equity, you've made payments for the last six months, and your mortgage loan was securitized (meaning bundled and sold as part of the mortgage-backed security debacle). Your mortgage must also be backed, according to Green, by Fannie Mae or Freddie Mac, in order to use HARP 2.0.

But HARP 3.0 is just around the corner, apparently. This version, which hasn't made it into law yet, is rumored to do away with the Fannie Mae or Freddie Mac requirement, which opens up a possible refinance to many other homeowners ("millions" according to Green).

The latest version is called the Responsible Homeowner Refinancing Act of 2013. We'll have to wait and see whether it gets anywhere in Congress.

Source: HARP 3 / #MYREFI: What It Means, Who May Qualify

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