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Tuesday, December 20, 2011

HARP: Refinancing for Underwater Mortgage Loans

HARP: Refinancing for Underwater Mortgage Loans


As an attorney who assists borrowers with mortgage loan modifications, foreclosure negotiations, refinancing, deeds-in-lieu, and other mortgage loan relief, one of the most common complaints that I hear is that borrowers who continue to pay their mortgage loans are essentially penalized for living up to their obligations: “I’m current on my mortgage, so the bank won’t modify it. My house is underwater, so I can’t refinance. How come it’s only the people who aren’t paying their mortgages who get help, while I get punished for continuing to pay mine?”


Well, the Home Affordable Refinance Program (HARP) may be for you, my responsible yet underwater friends.


HARP is specifically designed to assist borrowers who have an unfavorable loan – to – value ratio (LTV). These borrowers have little equity, no equity, or negative equity in their homes and have likely seen the value of their property decrease over the last few years, often becoming worth less than what is owed on the mortgage loan(s).


There is less information available about HARP when compared to what is known about other government – backed mortgage relief programs, but Fannie Mae has publicly stated that “If you don’t have any equity [in your home], you may still qualify for the government’s Home Affordable Refinance Program.”


Who qualifies for the Government’s Home Affordable Refinance Program (HARP)? According to the US Government, the following mortgage loans may qualify:



  1. The mortgage loan must be owned or guaranteed by Freddie Mac or Fannie Mae.

  2. Freddie Mac or Fannie Mae must have obtained their interest in the loan before May 31, 2009.

  3. The mortgage loan must be current with a good payment history for the preceding 12 months.

  4. The mortgage loan must not have been previously refinanced via HARP (except for Fannie Mae HARP refinances which took place between March and May, 2009).

  5. The current LTV must be greater than 80%. For example, if you owe $500,000 but your home is now only worth $400,000, your LTV is 125% (greater than 80%).


 A refinance through HARP should result in lower monthly payments. Keep in mind, however, that applying for refinancing via HARP is applying for a new loan. Thus a loan application needs to be completed, refinancing fees apply, and an underwriting evaluation process will occur. You must be current on your mortgage loan to qualify for HARP.


If a traditional or HARP refinance isn’t the right option for you, but you want to keep your property, a mortgage loan modification may be an option. While making it through the mortgage loan modification process can be challenging, it can be done.


McGrath & Spielberger, PLLC provides assistance to borrowers in need of mortgage relief services, such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.