HARP extended to 2015

By Gretchen Wegrich

The Federal Housing Agency (FHFA) extended the Home Affordable Refinance Program (HARP) for an additional two years to Dec. 31, 2015. The program was due to expire Dec. 31, 2013.

"More than 2 million homeowners have refinance through HARP, proving it a useful tool for reducing risk," said Edward DeMarco, FHFA acting director.

He added, "We are extending the program so more underwater borrowers can benefit from low interest rates."

The announcement did not include any information about the possibility of a HARP modification or HARP 3 program.

Homeowners who are "underwater" on their mortgages owe more than their home is currently worth. Underwater mortgages are not eligible for a traditional refinance. Underwater homes became common following the collapse of the housing market, and are the reason HARP was created. 

For the more than 2.2 million homeowners who have refinanced through HARP since it was first created in April 2009, the program has offered a path to a better mortgage loan and has guided many at-risk homeowners away from foreclosures.

FHFA also announced it plans to launch a nationwide campaign to inform homeowners about HARP. The goal of this campaign will be to educate consumers about HARP and its eligibility requirements, as well as to motivate underwater homeowners to explore their options and take advantage of HARP before the program ends. Adding an extension to the program will allow underwater homeowners an opportunity to refinance, offer clear guidance to lenders and limit risk for Fannie Mae, Freddie Mac and taxpayers.

In order to be eligible for a HARP refinance, homeowners must meet several criteria, such as the stipulation that the loan must be owned or guaranteed by Fannie or Freddie and must have been sold to either Fannie or Freddie before May 31, 2009. The current loan-to-value ration must be greater than 80%.

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.