How Homeowners Qualified for the HARP Program

The Home Affordable Refinance Program, known as HARP, was a federal initiative designed to assist homeowners in refinancing their mortgages. Its primary purpose was to provide relief to those who faced significant challenges in refinancing due to a decline in their home’s value, often leaving them with little to no equity, particularly in the aftermath of the 2008 financial crisis. The HARP program officially concluded on December 31, 2018, and is no longer available for new applicants.

Borrower Eligibility Requirements

To qualify for a HARP refinance, homeowners needed to meet specific criteria related to their payment history and property occupancy. Borrowers had to demonstrate a strong record of timely mortgage payments, with no more than one 30-day late payment allowed within the 12 months preceding the application. They also needed to be current on their mortgage payments at the time of application, with no late payments in the six months immediately prior. This emphasis on current payments distinguished HARP from programs aimed at preventing foreclosure, as HARP was for those maintaining their obligations despite negative equity.

The program also considered the occupancy status of the property being refinanced. Eligible properties included primary residences, one-unit second homes, or 2-4 unit investment properties. While HARP aimed to help those with limited equity, borrowers still needed to show a demonstrable capacity to repay the new mortgage. HARP did not impose income limits, and for Fannie Mae loans, a minimum credit score was not required, making it more accessible to a broader range of homeowners.

Mortgage and Property Eligibility Requirements

Beyond the borrower’s profile, the mortgage loan and property had to satisfy distinct HARP requirements. The original mortgage must have been originated on or before May 31, 2009. This date ensured the program targeted loans issued before the peak impact of the housing market downturn. The loan also had to be owned or guaranteed by either Fannie Mae or Freddie Mac. Homeowners could typically verify their loan’s ownership through online lookup tools provided by Fannie Mae and Freddie Mac.

HARP focused on loan-to-value (LTV) ratios, designed for those with high LTVs, meaning they owed more than their home was worth.

• The LTV ratio needed to be greater than 80% for eligibility.
• For fixed-rate mortgages, there was no upper LTV limit under HARP II.
• Adjustable-rate mortgages had a maximum LTV of 105%.
• The property type also had to be a one-to-four unit dwelling.
• A mortgage could not have been previously refinanced under HARP.

The Application Process for HARP

Historically, homeowners interested in a HARP refinance would typically contact their existing mortgage servicer. Borrowers also had the option to explore other participating lenders, as they were not restricted to their original mortgage provider.

Upon identifying a potential lender, the next step involved gathering and submitting necessary documentation. This included financial records such as recent pay stubs, W-2 forms, and tax returns to verify income. Bank statements, current mortgage statements, property tax statements, and homeowner’s insurance declarations were also commonly required. The submission of this comprehensive package allowed the lender to assess the borrower’s financial standing and ensure all program requirements were met.

Following application submission, the lender would proceed with underwriting, a review process that evaluated the loan’s risk. If the application met all criteria, the lender would issue an approval, leading to the final steps of closing the new refinance loan. The closing process involved signing new loan documents and finalizing the terms of the refinance, transitioning the homeowner to their new, more affordable mortgage.