Mortgage Refinance Program for High Loan-to-Values Extended

March 02nd, 2010

The expiration date of the federal government’s Home Affordable Refinance Program (HARP) program–which allows mortgage refinances for eligible borrowers with loan-to-value ratios as high as 125%–has been extended. HARP was set up to help borrowers with Fannie Mae- and Freddie Mac-owned conventional loans.

Set to expire on June 30, 2010, the federal regulator that oversees Fannie Mae and Freddie Mac has granted a one-year extension of the program, now set to expire on June 30, 2011.

Mortgages Refinanced through HARP

Since the inception of the program in April 2009, HARP has helped 190,000 borrowers with single-family-home mortgage refinances. These refinances involved conventional loan balances of 81% to 125% of the home’s value (the loan-to-value ratio). On average, qualified applicants lowered their mortgage rates enough to save $150 per month on their mortgage payments.

HARP Eligibility

To be eligible for HARP transactions:

You can determine online whether your mortgage is owned by Fannie Mae or Freddie Mac and possibly eligible for this mortgage refinance program. Note there are some false negatives with the online lookup tools. If you think you have a conventional loan that is a Fannie Mae or Freddie Mac program and do not receive a result indicating you are eligible, try variations of your address (i.e. Oak St, Oak Street, or just Oak) and also check both Web sites. If you still get a negative result, contact your mortgage servicer and ask them if your mortgage is owned by Fannie Mae or Freddie Mac.

Mortgage Insurance and Second Mortgages

If your mortgage currently does not have mortgage insurance and you obtain a HARP mortgage refinance, you will not be required to have mortgage insurance on your new conventional loan. If you currently have mortgage insurance, your new mortgage will require continued coverage at the same rates.

If you currently have a second home loan or home equity line of credit, the holder of the second mortgage will need to cooperate with the HARP transaction and subordinate the existing lien behind your new conventional loan. The Obama administration has made it clear to holders of second mortgages that they are expected to cooperate with HARP transactions so homeowners can benefit and lower their total monthly mortgage obligations. Many mortgage lenders have been cooperating with HARP transactions and subordinating their liens, so check with your home equity lender about participation.

With mortgage rates still at historic lows and home values in many regions of the country leveling off and even rising in some areas, hundreds of thousands of American borrowers are eligible for lower mortgage rates and monthly payments through a mortgage refinance under the Home Affordable Refinance Program. If you may be one of these borrowers who can benefit, take advantage of the HARP extension and determine your eligibility.

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