Homeowners who haven't refinanced their mortgage because they
owe more than their home is worth might have another shot at
refinancing now that the Federal Housing Finance Agency (FHFA) has
extended the Home Affordable Refinance Program (HARP) until Dec.
That's the good news.
The bad news is that the HARP rules remain unchanged, and while
the extension might help some homeowners, others will still face
No HARP 3.0
Rumors have been swirling for some time that adjustments might
be made to the current
HARP 2.0 guidelines
, says Kirk Chivas, chief operating officer at First Commerce
Financial, a mortgage company in Wixom, Mich.
For instance, some borrowers could benefit from a later
loan-origination-eligibility date or the ability to use HARP more
than once, says Chivas. The current guidelines require loans to be
originated on or before May 31, 2009 and restrict HARP to one
FHFA Senior Policy Analyst Michelle Murphy says there are no
plans at this time to change the eligibility date or allow multiple
Might other aspects of the program be changed in a sweeping HARP
3.0? FHFA won't say. Rather, Murphy explains, the agency is
"focused on borrower awareness to encourage eligible homeowners to
Nearly 100,000 HARP refinances were completed in February 2013,
bringing the total to 2.3 million since the program's inception in
April 2009, according to FHFA.
Regardless of when HARP expires, many homeowners will still be
unable to refinance through the program chiefly for these
. HARP has no maximum loan-to-value (LTV) ratio for borrowers who
obtain a new fixed-rate mortgage and a maximum LTV ratio of 105
percent for borrowers who get a new adjustable-rate mortgage. But
lenders typically impose their own guidelines, called "overlays,"
which may include stricter LTV caps.
Chivas says some lenders have loosened their LTV guidelines,
raising maximums from, say, 105 percent to 135 percent or 125
percent to 150 percent.
"As home values have continued to increase, that has helped,"
. The inability to use HARP twice is a source of frustration for
borrowers who tapped the program when
were higher than they are today.
"They HARP'd already and took a rate of, say, 5 percent,"
Chivas says. "They're not pleased because they feel that they
pulled the trigger too early."
The average interest rate on a conforming 30-year fixed-rate
mortgage in May 2009 was 5.05 percent, according to HSH.com. In
May 2013, that rate averaged 3.68 percent.
Fannie and Freddie
. Another source of frustration for borrowers is that they can't
use HARP unless their existing loan is owned or guaranteed by
Fannie Mae or Freddie Mac.
Chivas says borrowers who don't have a Fannie Mae or Freddie
Mac loan are "getting hammered" because their loans have rates of
5, 6 or 7 percent, they don't want to move, but they don't have
enough equity to refinance without HARP.
"They're stuck," he says.
Call and ask
Borrowers who haven't yet refinanced through HARP should contact
their lender to find out whether it is an option, says Joe Rogers,
executive vice president at Wells Fargo Home Mortgage in Charlotte,
"The best thing for homeowners to do is visit their lender and
discuss the requirements to be eligible for HARP and if there are
ways for them to position themselves for approval if they're not
meeting the guidelines," he says.
Murphy says borrowers who've previously been denied for HARP
should try again or shop around.
"Call your current lender and share with them that you want to
explore a HARP refinance," she says. "If you're denied, find out
the reason and don't be discouraged. You may be able to refinance
with another lender."
Chivas says borrowers who don't qualify for HARP, but have at
least some equity might be able to refinance with private mortgage
"A lot of folks refinance with minimal equity positions," he
says. "They have 5 percent, 10 percent or 15 percent, and they've
taken a new loan with PMI."
To calculate the best way to finance your refinance, be sure to
use a mortgage refinance calculator.