Key Insights into the Home Affordable Refinance Program (HARP)
The Home Affordable Refinance Program (HARP) was a U.S. government’s knight in shining armor, albeit with some rust, designed for homeowners whose homes owed more on the prom than their property was worth in the real estate dance of the late 2000s. Though it wrapped up in December 2018, echoes of its attempt to save the castle (your home!) from the murky waters of underwater mortgages can still be heard.
Eligibility and Operations
Eligibility for HARP was quite specific: your mortgage needed to be backed by either Freddie Mac or Fannie Mae, and acquired by them before the magical date of May 31, 2009. Essentially, for those who were current on their payments and living in properties not needing a fairy tale makeover, HARP was a possible lifeline.
Criteria and Limitations
The national treasure wasn’t for everyone: if your financial ship had already sunk (i.e., defaulted), HARP wasn’t going to be your financial life raft. Nor was it for those who had abandoned ship—properties had to be occupied.
The Legacy of HARP
Although HARP has sailed into the sunset, its ripples still impact current refinancing options, providing a blueprint for dealing with mortgage crises.
Home Affordable Refinance Program (HARP) vs. Home Affordable Modification Program (HAMP)
Not to be confused with its cousin, the Home Affordable Modification Program (HAMP), which also sought to prevent homeowners from drowning but focused instead on those already gasping for air (in imminent or actual default). Modification under HAMP was like getting a slightly bigger bucket to bail out your sinking ship, but only through the lender who held your note.
Related Terms
- Underwater Mortgage: A situation where the homeowner’s balance on the mortgage is higher than the market value of the property.
- Freddie Mac and Fannie Mae: Government-sponsored enterprises that play a huge role in the U.S. mortgage market by buying mortgages from lenders.
- Mortgage Refinancing: Replacing the existing mortgage with a new one, which can possibly have better terms, depending on the market and borrower’s creditworthiness.
- Default: Failure to meet the legal obligations (or conditions) of a loan.
Suggested Reading
- “The Big Short: Inside the Doomsday Machine” by Michael Lewis explores the build-up of the housing and credit bubble during the 2000s.
- “Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud” by David Dayen, tells the story of the foreclosure crisis from the eyes of those affected.
So there you go, if you missed the HARP boat, don’t let your ship sink - there might still be options to keep your financial head above water! Remember, just because HARP has ended, doesn’t prevent the melody of mortgage refinancing from playing on in other forms. Keep your ears open and stay attuned to your options!
