The Federal Housing Finance Agency, Fannie Mae and Freddie Mac have announced an improved Home Affordable Refinance Program (HARP). Experts are of the opinion that this will allow quite a large number of delinquent borrowers to refinance their existing mortgages.
What is the new HARP all about?
Under the new HARP, those homeowners whose mortgages are owned by Fannie and Freddie, but are underwater, will be able to refinance their mortgages. Under the earlier version of HARP, the borrowers were allowed to refinance only up to 125% of the property's appraised value. In the new version, this cap has been removed. Due to this cap, homeowners of the states that were hardest hit by foreclosures such as Florida and California were unable to take advantage of this program. As the cap has been removed now, large number of borrowers will be able to take advantage of this program.
Apart from this, HARP has been extended through December 31st, 2013. Those borrowers whose loans had been sold to Fannie or Freddie on or before May 31st, 2009, will be able to take advantage of this program.
What are the eligibility criteria?
Some of the major eligibility criteria to qualify for HARP include the following:
- Borrowers should be current on their mortgage payments
- No late payments in the last 6 months
- Not more than 1 late payment in the last 1 year.
When will this new HARP be available to the borrowers?
By November 15th, 2011, Fannie Mae and Freddie Mac will send the rules and guidelines regarding the new HARP to the lenders. There are chances that the lenders may start offering this option to the borrowers from 1st December, 2011 onwards.