Seven years after the federal government first offered an option to help some homeowners refinance into more affordable mortgages, the program is being extended yet again, and plans for a new refinancing program are being completed.
The Home Affordable Refinance Program, or HARP, already had been extended at least twice and was scheduled to end at the end of this year. But HARP will continue through September 2017, the Federal Housing Finance Agency said.
The program, begun in response to the housing crisis, allows people who owe more than their home is worth, or who have little equity, to refinance into a loan at current low interest rates. (The average rate for a 30-year, fixed-rate mortgage has hovered below 3.5 percent for weeks. For much of 2008, it was about 6 percent.)
More than 3.4 million homeowners have refinanced their mortgages under the program since it began, according to the housing finance agency, which oversees the mortgage giants Fannie Mae and Freddie Mac. About 18,000 borrowers refinanced under HARP in the second quarter of this year, down from nearly 20,000 in the first quarter. Still, more than 323,000 loans are estimated to remain eligible for refinancing under HARP.
Erin Lantz, vice president for mortgages with the real estate site Zillow, said about 12 percent of mortgaged homes remained underwater at the end of June. But borrowers may still not be aware that the HARP program exists, she said. Or, because they may have failed to qualify in the programs early years because of missed or late payments, they may think they remain ineligible.
Cora Fulmore, coordinator of the Florida Housing Counselors Network, said some borrowers remained wary, perhaps because of past tussles with lenders. Housing counselors have tried various outreach efforts to get people to apply, she said, including going door-to-door and offering gift cards to borrowers.
There’s a lack of trust, she said. They’re not believing this program can help them.
Some borrowers may be suspicious that HARP is too good to be true, or they may simply not want to take the time to apply, said Jay Plum, head of consumer and mortgage lending at Huntington Bank in Columbus, Ohio. The bank has made overtures to eligible borrowers, he said, going so far as to send HARP document packages to homeowners by overnight delivery.
He urged borrowers who might think they do not have refinancing options to take a look at the program, noting that it offers a streamlined application process that often does not require an appraisal. It really is in their best interest, he said.
Madonna Barwick, 49, a teacher who lives in Canfield, Ohio, said a teller at a Huntington grocery store branch told her about HARP. She was able to refinance her mortgage last year, she said, lowering her monthly payment by more than $300 and easing her financial worries. Her rate dropped to just over 4 percent from more than 6.6 percent. It was a blessing, she said.
Here are some questions and answers about special refinancing options:
What loans are eligible for HARP refinancing?
Loans must have originated on or before May 31, 2009, and must be owned or guaranteed by either Fannie Mae or Freddie Mac. The property must have a loan-to-value ratio the mortgage divided by the homes value of 80 percent or higher. (A $140,000 house with a $130,000 mortgage would have a loan-to-value ratio of about 93 percent.) The borrower must have had no late payments in the previous six months, and no more than one late payment in the previous year.
Do I have to do a HARP refinancing with my current lender?
No. You should start by contacting your current loan servicer, but you should also check other lenders to compare rates and fees, said Ms. Lantz at Zillow. To find participating lenders in your area, search on the HARP website.
Bob Walters, chief economist with Quicken Loans, said borrowers should not hesitate to inquire about HARP if a loan officer does not mention it: They should certainly ask.
How will the new refinancing option available in October 2017 differ from HARP?
As with HARP, borrowers will generally have to be current on their payments. Unlike HARP, however, the new refinancing option will not have a cutoff date, so loans made after May 2009 may be eligible. And unlike with HARP, borrowers can use the new refinancing option more than once.
The new offering will generally focus on mortgages with loan-to-value ratios of 95 percent or higher. Freddie and Fannie say they will announce more details in November.