suburban neighborhood

Update: HARP expires December 31, 2018.

The Federal Housing Finance Agency has extended two programs, HARP and HAMP, meant to help struggling homeowners in the aftermath of the 2008–09 housing crisis. They will now run through 2016.

Although the number of homeowners taking advantage of these programs has steadily decreased with the passage of time, if you’re home has lost value or you’re in danger of falling behind on your payment, these programs may help you.

HARP

The Home Affordable Refinance Program (HARP) is designed to help borrowers whose loans were acquired by Fannie Mae or Freddie Mac on or before May 31, 2009. If you obtained your mortgage around this time and your home is worth less than you owe, HARP can help you. The program is intended to get you into the lower rates currently available.

Millions have taken advantage of the program, but there are plenty of people still eligible. Federal Housing Finance Agency Director Mel Watt said over 600,000 people could still benefit. To put these numbers in some context, there are over 81,000 people in Florida and 31,000 Californians alone eligible for a HARP refinance.

That could also be a really low estimate. The 600,000 figure only accounts for those who could benefit from the program who have loan-to-value (LTV) ratios greater than 80%. Although not technically a HARP refinance based on the LTV ratio, clients that meet all the other requirements can do a streamline refinance through Fannie or Freddie. According to the Urban Institute, when you account for lower LTVs, that number is actually just shy of six million. A lot of people could be saving money.

If you lost value on your home, you can refinance even if your home is worth half of what you paid for it. For example, if your home is worth $50,000, but you owe $100,000, you qualify. This is true even if the property is your second residence or vacation home.

Unless you refinanced under an earlier version of the HARP program anytime from March-May 2009, you can only take advantage of this program once.

In order to be eligible for this government-sponsored program, you must be current on your mortgage payments, meaning you can only have one late payment in the last year and none in the last six months. You may still be eligible if you’ve had a bankruptcy in the past.

Not sure if your loan is held by Fannie or Freddie? Use the handy Fannie Mae or Freddie Mac look-up tools to find out.

Home Affordable Modification Program (HAMP)

Sometimes in life, things happen that are beyond your control. Maybe you were laid off from your job, or a family member fell ill and you now have to pay off huge medical bills. There’s just not enough money left over to cover the mortgage payment.

If you’ve experienced a financial hardship and have fallen behind on your mortgage payment (or are in danger of doing so), the Home Affordable Modification Program (HAMP) may be a solution for you.

This program is available for loans insured by Fannie Mae and Freddie Mac. The goal of HAMP is to reduce your mortgage payment so that it’s no more than 31% of your pretax monthly income. This is accomplished in one of a few ways:

  • Lowering your interest rate either temporarily or permanently
  • Extending your term (e.g., 30 years to 40 years)
  • Changing the loan type (e.g., fixed-rate loan to a step loan)

A step loan is a type of adjustable rate loan that allows a limited amount of rate adjustment over time. For example, if your interest rate was lowered below current market rates at the time of your modification to make the payment affordable, that rate stays fixed for five years. After that, your rate will be raised 1% per year for up to five years until your rate matches the market rates at the time of your modification.

Any amounts that are past due, like interest and escrow, may be added to the principal balance which is amortized over a new term.

Eligibility

In order to be eligible for the program, you have to meet certain requirements:

  • Your loan must be backed by one of the insurers above
  • The loan must have been closed on or before January 1, 2009
  • Your property cannot have been condemned
  • You owe no more than $729,750 on a primary residence (higher limits for multiunit rental properties)
  • You can’t have been convicted of mortgage or real estate fraud in the last 10 years

For more information, check out the HAMP website or contact your mortgage servicer.

Still have questions? Leave us a note in the comments.

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This Post Has 13 Comments

  1. I need advice. We too were victims of that 2008 crash. We currently have a HAMP loan but our home is still under water. It does have very low interest but changes are ahead. They will gradually rise. We went bankrupt in 2011 due to permanent layoff. We did not reaffirm our second mortgage but we were offered relief through the
    2MP Program so we participated. In this program there are also gradual payment increases. Coming in July the payment on the 2nd is about to increase. It’s a pay and stay situation for that loan. We were forced to reaffirm the first because their alternative was foreclosure. We are 100% current and my husband now has a good job. I hate having 2 Mortgages. Are there any new options for us? Derogatory marks shave affected our creditworthiness. Most rates are way too high.
    Feeling stuck.

    1. Hi Jeannie:

      We can definitely help you look into your options and at the very least try to give you some good advice. Someone will be reaching out.

      Thanks,
      Kevin Graham

      1. We are going to lose our house we haven’t been able to pay our morgage in 8 or 9 months it’s in foreclosure status now we can’t get a modification bc we had two years ago help!!! Please we have 3 kids and no where to go

        1. Hi Jennifer:

          I’m sorry to hear you’re in this difficult situation. I’m not sure what your options could be at this point. I’m going to get this to one of our Home Loan Experts that can help go over your situation in further detail. Even if we can’t help you at the moment, we should be able to give you some advice moving forward. Someone will be reaching out.

          Thanks,
          Kevin

  2. hi! I lost my job 7 weeks ago… have not missed a mortgage payment with you… do you have any programs that might help me? thanks

    1. Hi Tim:

      We’re very sorry to hear that. I’m going to have someone from our Client Relations team reach out to you to look into your situation and see what we can do.

      Thanks,
      Kevin Graham

    1. That’s an awfully high debt-to-income ratio, Suzette. Before you’re ready to buy, I recommend paying down your debts to a more manageable amount. I’m also going to have a home loan expert reach out to you with an email. They’ll take a deeper look into your situation and give you some advice. In the meantime, read this article about tackling credit card debt.

  3. I would like to know if I qualify for a HARP loan based on the information you have on file for me. I am only interested in the HARP loan. It is quicker, no appraisals and less hassle. If I’m not eligible would not be interested in talking with you at this time.

    1. Good morning, Edith! Thanks for your comment, and we’ll have someone contact you to see if you qualify for HARP.

  4. I am wanting to purchase a home , my credit is fair, my son is on SSI but hasn’t had credit since 2011, The purchase price of the home is $50,000 which the owner is a friend and is giving us a good deal. Its a 2 story house with a double garage and shed on 2 acres of ground. My mother is wanting to help also, I hope this Harp Program can help

    1. Hi Connie! I’ve passed this on to our team of home loan experts. They’ll reach out shortly to discuss your options.

  5. I have been looking at new homes in Utah and several places say you can buy a new home for one half the purchase price through the HARP program and never have a house payment, you just keep up the taxes and insurance. We have excellent credit (789), no payments late, just sold our house and want to know if this is a benefit to us or just folks who are in mortgage trouble. I looked at the FHA website and it is not too clear.

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