After years of low popular interest in restrictive homeowner financing assistance programs, the Federal Housing Finance Agency (FHFA) announced today that it will make the Home Affordable Refinance Program (HARP) available to more distressed homeowners by removing the current 125% loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac.
This means that some homeowners, who owe significantly more than the market value of their owns but are still current on their
home loans, will now be able to refinance for lower interest rates. Called HARP Phase II, the program enhancements include reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model estimate, and extending HARP until the end of 2013. The new federal guidelines for the HARP should be available to mortgage lenders and servicers by November 15, 2012.
The basic eligibility requirements for an enhanced HARP loan are as follows:
- Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
- Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
- Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
- Current loan-to-value (LTV) ratio must be more than 80%.
- Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.