What Are HARP Loans and Are They Still Available?

The Home Affordable Refinance Program (HARP) emerged in 2009 in response to the housing crisis, leaving many homeowners struggling with their mortgages. This federal program offered a lifeline to individuals whose home values had declined, often leaving them owing more than their properties were worth. HARP’s primary purpose was to enable these homeowners to refinance into more stable and affordable mortgage terms, preventing potential foreclosures and stabilizing the housing market. It aimed to assist those diligently making their mortgage payments but unable to refinance traditionally due to a lack of equity.

What HARP Loans Were

HARP loans represented a specific type of mortgage refinance, distinguished by their government-backed nature. The program was specifically tailored for mortgages owned or guaranteed by either Fannie Mae or Freddie Mac. Unlike a loan modification, which alters the original terms of a mortgage, HARP was a true refinance, replacing an existing mortgage with a new one. Its unique allowance for homeowners with high loan-to-value (LTV) ratios, including those with little, no, or even negative equity, was a defining characteristic. This flexibility helped many homeowners who found themselves “underwater” on their loans after home values declined.

Qualifying for a HARP Loan

Eligibility for a HARP refinance involved meeting several specific criteria.
The existing mortgage had to be owned or guaranteed by Fannie Mae or Freddie Mac.
The original mortgage also needed to have been originated on or before May 31, 2009.
Borrowers were required to demonstrate a responsible payment history, specifically having no 30-day late payments in the past six months and no more than one 30-day late payment in the preceding twelve months.
A homeowner could not have previously refinanced the same mortgage under HARP.

The loan-to-value (LTV) ratio of the property was a significant factor. The original loan typically needed an LTV of at least 80 percent. For fixed-rate mortgages, there was generally no upper limit on the LTV, meaning even deeply underwater homeowners could qualify. However, for adjustable-rate mortgages (ARMs), the LTV was capped at 105 percent.

Key Advantages of HARP Refinancing

HARP refinancing offered several tangible benefits to eligible homeowners.
A primary advantage was the opportunity to secure a lower interest rate, which directly led to reduced monthly mortgage payments.
This program also allowed homeowners to shorten their loan terms, enabling them to build equity faster and pay off their mortgages sooner.
Another significant benefit was the ability to convert an adjustable-rate mortgage (ARM) into a more predictable fixed-rate mortgage, providing stability against future interest rate fluctuations.
HARP often bypassed the need for a new home appraisal, which saved borrowers time and money.

The program’s design allowed these advantages to be realized even for properties with little to no equity, a key distinction from conventional refinance options that require substantial home equity.

The End of the HARP Program

The Home Affordable Refinance Program officially concluded on December 31, 2018, after assisting approximately 3.5 million homeowners. While HARP is no longer available, its discontinuation paved the way for new initiatives to serve similar needs for homeowners with high loan-to-value ratios. Fannie Mae introduced the High LTV Refinance Option (HIRO), and Freddie Mac launched the Enhanced Relief Refinance (FMERR).

These replacement programs aim to offer comparable refinance opportunities for eligible borrowers with little or no equity. Homeowners seeking to refinance with limited equity should consult with lenders to explore current available options, as the landscape of mortgage relief programs continues to evolve.