HARP Refinance Program in Pennsylvania: Help for Underwater Homeowners

The Home Affordable Refinance Program, known as HARP, has been revised and expanded to hopefully help more homeowners.

How is the new HARP different from the previous HARP?

Under the new HARP refinance program, the big change is that IT DOES NOT MATTER HOW MUCH A HOME HAS DECREASED IN VALUE.

HARP has eliminated the underwater restrictions for new applicants seeking a low fixed rate mortgage.  For instance, if you have a conventional mortgage with a 200K balance and the home is valued at 100K, your calculated Loan to Value (LTV) is 200%, you would still qualify for the HARP program. Even if the property was only worth 1 penny, technically you could still qualify. There are no maximum LTV restrictions with this program.

There is a minimum Loan to Value restriction. An applicant can not have a loan to Value ratio less than 80%. Essentially, if you have too much equity in your home, you will be considered ineligible for the new HARP program.  Like previous editions of HARP, the new HARP requires that applicants currently have a mortgage that is owned by either Fannie Mae or Freddie Mac.  The current mortgage also must have been owned by Fannie Mae or Freddie Mac prior to 6/1/2009.

How do I know if my mortgage is owned by Fannie Mae or Freddie Mac?

Everybody has heard of these two huge mortgage agencies, but knowing if your current mortgage is actually backed up or owned by Fannie or Freddie is often hard to know. When you make your mortgage payment it is the name of the lender that you send the payments to, so knowing if you have a Fannie/Freddie mortgage is not always obvious. Fannie and Freddie back up what are known as Conventional mortgages. If you have a conventional mortgage, you most likely have a Fannie Mae or Freddie Mac mortgage.  If you are not sure if your mortgage is a Fannie Mae or Freddie Mac, it is best to check their websites. Each agency has a website for consumers to quickly check this exact requirement.

Items to Remember when Qualifying for HARP

  • only for mortgages currently owned or backed by Fannie Mae or Freddie Mac

  • no delinquent mortgage payments in the last 6 months and only a total of one 30 day late payment is allowed in the last 12 months

  • no cash out or paying off other debts allowed with this program

  • no maximum LTV for new Fixed Rate Mortgages

  • 105% maximum LTV for those seeking a new Adjustable Rate Mortgage through the
    HARP program

  • first time HARP users only, if you closed a mortgage under previous HARP editions, you can not apply for this new edition

  • current home does not need to be a primary residence as long as the home was first purchased as a primary residence

  • any 2nd mortgages on property will have to be subordinated by the current 2nd mortgage holder, this
    depends on the 2nd mortgage holder agreeing to this

  • if the current mortgage has monthly Mortgage Insurance, the new mortgage must also have the same level of Mortgage Insurance

  • if the current mortgage closed with Lender Paid Mortgage Insurance (typically built into the interest rate as opposed to a monthly MI amount), it is ineligible for the new HARP

If you currently have a Fannie Mae or Freddie Mac mortgage but you have not had any luck qualifying for a traditional refinance or even a previous version of HARP due to a low appraised value, the new HARP version may just be the solution to new lower mortgage payment.