Home Affordable Refinance Program (HARP)

What Is the Home Affordable Refinance Program (HARP)?

The Home Affordable Refinance Program (HARP) was a program offered by the Federal Housing Finance Agency to homeowners who own homes that are worth not exactly the outstanding balance on the oan.

The program has since ended, however it was intended to give relief after the financial crisis of 2008. HARP was made to assist underwater and close underwater homeowners with refinancing their mortgages due to falling home prices. While HARP ended in December 2018, there are still options for borrowers who are underwater on their mortgages. A homeowner who is underwater on their mortgage owes inclining further toward their home than it is worth.

Understanding the Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program (HARP) refinance was just accessible for mortgages that were guaranteed by either Freddie Mac or Fannie Mae — the program was made in a joint effort with these elements. To be eligible for HARP, homeowners must have been in possession of mortgages that were sold to both of those elements prior to May 31, 2009.

Due to the impact of the 2008 financial crisis, and its effect on real estate values all through the United States, numerous homeowners found themselves upside down or underwater on their home loans. Upside down or underwater is utilized to depict examples when a borrower owes more on a loan than the current value of the collateral it is secured against.

On account of a mortgage, the collateral is the property. The federal government sent off HARP in 2009 to endeavor to slow the rate of abandonments and help borrowers that had been exploited by subprime lending rehearses.

The program was simply accessible to borrowers who qualified. Borrowers were required to be current on their mortgage payments and the property must be looking great. Borrowers who had as of now defaulted or had cleared their properties were not eligible for the program. Any participating lender was eligible to aid a borrower in a HARP refinance. Borrowers didn't need to go through their current lender.

The program ended on December 31, 2018.

Home Affordable Refinance Program (HARP) versus Home Affordable Modification Program

One more program that was carried on a mission to stem the flow of dispossessions after the market slumped was called a mortgage modification. The Home Affordable Modification Program expired before HARP, in 2016. Dissimilar to HARP refinances, these programs were for borrowers that had previously defaulted on their loan, or for whom default was up and coming.

A modification must be secured through the existing lender, and every lender had its own requirements for qualification. Albeit the interaction to change a mortgage changes the terms of a mortgage note, it isn't equivalent to a refinance.

At times modifications can report on the borrower's credit report as having the terms of the mortgage altered. Now and again, modifications can impact future creditworthiness. A few borrowers may likewise be confronted with an extra tax liability, as the terms of their modification might incorporate discounting a portion of the debt that is owed, which the Internal Revenue Service (IRS) may count as earned income.

Features

• The program has since ended, however it was intended to give relief after the financial crisis of 2008.
• The Home Affordable Refinance Program (HARP) was a program offered by the Federal Housing Finance Agency to homeowners who own homes that are worth not exactly the outstanding balance on the loan.
• While HARP ended in December 2018, there are still options for borrowers who are underwater on their mortgages.