HARP Loan Requirements

Underwater homeowners will have access to refinancing, and lower rates,  thanks to new expanded guidelines under the HARP Loan Program.  The HARP loan requirements under HARP 2.0 (as it is called), further loosens the LTV requirement that makes refinancing otherwise impossible for many. Lenders will start having programs available in March 2012.

Basically Fannie Mae and Freddie Mac buy a large percentage of loans from banks. So though you may make your monthly payment to a bank, in many cases the banks just service the loan which has been sold to Fannie or Freddie.  The bank originates the loan and service the loan, but Fannie owns the loan.

When Fannie or Freddie already own an underwater loan (where the principal is greater than the home’s value), Fannie and Freddie already bear the risk the insufficient collateral.  Through HARP Loan requirements, Fannie and Freddie are allowing loans they already “own” to be refinanced at a lower rates.  The lower rate translates into a lower monthly payment to the borrower.  Lower rates helps consumer, and hopefully keeps people in their homes while the economy recovers.  Why do they do it?  -because as government sponsored agencies, they generally work cooperatively with the federal government. A bank that would prefer to keep the borrower locked in at the higher-more profitable rate,  But, Fannie and Freddie along with the FHFA and the Obama administration have goals to shore up the fragile housing market and bolster the economy in general.

HARP Loan Requirements:

  • The current home loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  •           How can I check if I my loan is owned by Fannie Mae for HARP Program Refinancing?
  •           How can I check if my loan is owned by Freddie Mac for HARP Program Refinancing?
  • The LTVs must be above 80% to be refinanced under HARP and there is no limit.  So theoretically a $200,000 loan on a $100,000 property should be eligible under HARP.
  • You must be current on you loan payments with no late payment in the last six months.  You can have no more than one late payment in the last 12 months.
  • Borrowers should contact any mortgage broker or lender offering HARP refinancing opportunities.  HARP loans are not made directly with Fannie/Freddie but with a traditional mortgage lender, credit union or bank.  Only 11 banks are making
  • The HARP Program will extend through December 31st, 2013

If you discover that you loan is owned by either Freddie of Fannie, click the Getting Started Menu – to get rates and apply.


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