Key takeaways
– HARP was a federal program launched after the 2008 financial crisis to help homeowners who were “underwater” (owed more than their home was worth) refinance into more affordable mortgages.
– It applied only to conventional mortgages owned or guaranteed by Fannie Mae or Freddie Mac and generally required that the loan had been sold to those entities on or before May 31, 2009.
– Borrowers had to be current on their mortgage; HARP was a refinance option (not a modification) and could not be used by borrowers already in default.
– HARP ended on December 31, 2018. Some successor/refinance options now exist through Fannie Mae, Freddie Mac, FHA, VA and other programs.
Overview — why HARP existed
HARP was established by the Federal Housing Finance Agency (FHFA) in 2009 to reduce foreclosures and help creditworthy homeowners who could not otherwise refinance because home prices had fallen. By removing loan-to-value (LTV) limits for eligible loans, HARP allowed underwater and near‑underwater borrowers whose mortgages were owned or guaranteed by Fannie Mae or Freddie Mac to refinance to lower interest rates and more sustainable terms.
Who qualified (high-level)
– Loan type: Conventional mortgage owned or guaranteed by Fannie Mae or Freddie Mac.
– Origination date requirement: The mortgage had to have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009 (this date was a key HARP eligibility cutoff).
– Payment status: Borrower generally had to be current on the mortgage (no recent defaults).
– Property status: Property in acceptable condition and not vacant/abandoned.
– No cash-out: HARP refinances could not be cash‑out refinances.
– Lender participation: Any participating lender could complete the refinance; borrowers did not have to use their current servicer (although mortgages were serviced by individual servicers).
How HARP differed from mortgage modification programs (HAMP)
– HARP = refinance: It replaced the old mortgage with a new mortgage (new rate and terms). It required being current on the loan.
– HAMP (Home Affordable Modification Program) = modification: It modified existing loan terms to reduce monthly payments for borrowers in or near default. HAMP targeted troubled borrowers and ended earlier (HAMP expired in 2016; HARP ended in 2018).
– HAMP modifications were arranged through the borrower’s existing lender/servicer; HARP refinances could be done through any participating lender.
Basic mechanics of HARP (what it allowed)
– Removed LTV caps for eligible Fannie/Freddie loans, enabling refinancing even when loans exceeded 100% of the home’s current value.
– Required underwriting for credit, income and assets consistent with the refinance product/rule set being used (requirements evolved during program updates).
– Included rules to discourage repeated refinancing for short-term gains and to ensure program integrity.
– Could be done without appraisal in some cases (streamlined documentation or automated valuation methods were permitted depending on circumstances and lender policies).
Timeline and end of program
– HARP began in 2009 and went through several changes to expand eligibility and streamline processing (for example, “HARP 2.0” expanded options).
– The program formally ended on December 31, 2018.
– After HARP’s expiration, Fannie Mae, Freddie Mac and other entitiesto offer refinance options that allow higher LTV refinancing under certain conditions (check current product offerings).
Practical steps — if you had a HARP‑eligible loan while the program was available
1. Confirm loan ownership
• Use Fannie Mae’s and Freddie Mac’s online loan lookup tools or contact your servicer to confirm whether your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac and whether it meets the sale date cutoff.
2. Verify payment status and history
• HARP required the borrower to be current. Make sure your payment history meets the requirement and resolve any recent missed payments.
3. Gather documentation
• Typical documents: recent pay stubs, W-2s or tax returns, bank statements, mortgage statements, ID, and property information.
4. Shop lenders
• Any participating lender could process a HARP refinance. Compare rates, fees and lender overlays (some lenders had stricter requirements than Fannie/Freddie).
5. Run the numbers
• Calculate closing costs and monthly savings; determine the break-even period. Don’t refinance if costs outweigh the benefits.
6. Complete the refinance application and underwriting
• Lenders used Fannie/Freddie guidelines; the process could include an appraisal or utilize automated valuation if allowed.
7. Close the loan and confirm new servicing details
• Make sure you understand your new payment, term, and whether any fees were financed into the loan.
What options exist now that HARP has ended
– Fannie Mae and Freddie Mac refinance options: Both enterprises offer refinance programs and relief refinance options that allow higher LTVs under certain conditions (review current Fannie/Freddie product guides).
– FHA, VA, USDA programs: FHA Streamline Refinance, VA Interest Rate Reduction Refinance Loan (IRRRL), and USDA refinance programs can be options for eligible borrowers.
– Conventional refinances: Some lenders will refinance high-LTV conventional loans depending on underwriting policies and mortgage insurance rules.
– Loan modification: If you’re delinquent, contact your servicer for loss mitigation options (modification, forbearance).
– Selling the home, short sale or deed in lieu: Consider if continuing to carry the mortgage is untenable.
– HUD‑approved housing counselors: Free or low-cost counseling can help you evaluate options and negotiate with servicers.
Practical steps — if you’re currently underwater (post‑HARP)
1. Check whether your loan is owned by Fannie Mae or Freddie Mac (use their tools).
2. Explore current enterprise refinance options and lender programs for high‑LTV loans.
3. Contact your servicer to ask about available loss mitigation or refinance alternatives.
4. Talk to a HUD‑approved housing counselor .
5. Compare refinance vs. modification vs. sale, including tax consequences and credit effects.
6. If you’re delinquent, prioritize preventing foreclosure—ask your servicer for options immediately.
Common FAQs
– Is HARP still available? No. HARP ended on December 31, 2018.
– Can underwater borrowers still refinance? Possibly. There are enterprise and government refinance programs and lender-specific options that may permit high‑LTV refinances; eligibility depends on loan ownership, product rules and borrower qualifications.
– Did HARP forgive principal? No. HARP was a refinance program (it replaced the mortgage) and did not generally provide principal reduction. Principal reduction programs were rare and handled differently.
– Do refinances or mods affect taxes? Potentially. Principal forgiven in a modification could be treated as taxable income in some circumstances. Consult a tax advisor.
Where to get official, authoritative information
– Federal Housing Finance Agency (FHFA): Home Affordable Refinance Program (historical info and program guidance)
– U.S. Department of the Treasury: Making Home Affordable (overview of HARP/HAMP while active) — or the Treasury archives for MHA materials
– Fannie Mae and Freddie Mac: loan lookup tools and current refinance program guides — see fanniemae.com and freddiemac.com
– HUD housing counseling locator
Sources
– Investopedia: “Home Affordable Refinance Program (HARP)”
– Federal Housing Finance Agency (FHFA): Home Affordable Refinance Program materials and guidance
– U.S. Department of the Treasury: Making Home Affordable (MHA) program information
– Check whether a specific loan might have been HARP‑eligible (I can walk you through how to use Fannie Mae/Freddie Mac lookup tools), or
– Compare current refinance alternatives for an underwater borrower based on your loan type (Fannie/Freddie, FHA, VA, private).