HARP Replacement Programs and Other Loan Assistance Options

The Home Affordable Refinance Program (HARP) provided a lifeline for homeowners struggling with underwater mortgages by offering refinancing options despite high loan-to-value ratios. Although HARP officially ended in 2018, homeowners still have various loan assistance options to secure better mortgage terms.

HARP replacement programs, like Fannie Mae's High Loan-to-Value Refinance Option (HIRO) and Freddie Mac's Enhanced Relief Refinance Mortgage (FMERR), continued HARP's mission by helping eligible borrowers refinance their loans. We'll explore these programs and other refinancing options and provide a comprehensive guide to available resources.

The Home Affordable Refinance Program (HARP) was launched in 2009 in response to the housing crisis. It aimed to provide mortgage loan assistance to homeowners with underwater mortgages. It allowed those who owed more on their homes than their current market value to refinance their loans at lower interest rates.

To be eligible for HARP, homeowners needed a mortgage owned by Fannie Mae or Freddie Mac, originated before May 31, 2009. They also had to be current on their mortgage payments, with no late payments in the last six months and no more than one late payment in the past year. Additionally, the loan-to-value ratio had to be greater than 80%, and loan payments had to be fully up to date when applying.

HARP offered several benefits to qualified homeowners, such as:

• Lower monthly mortgage payments
• Reduced interest rates
• Shortened loan terms
• Transition from adjustable-rate mortgages to fixed-rate mortgages

The program was set to expire on September 30 but was extended until the end of 2018. HARP officially ended on December 31, 2018.

When HARP was no longer available, homeowners with upside-down mortgages still found relief through replacement assistance programs, like Fannie Mae's High Loan-to-Value Refinance Option and Freddie Mac's Enhanced Relief Refinance. These programs offered solutions for refinancing mortgages and improving loan terms.

Fannie Mae’s High Loan-to-Value Refinance Option (HIRO) offered refinancing opportunities to homeowners with existing Fannie Mae mortgages who are current on their payments but have a high loan-to-value ratio above the limit for standard limited cash-out refinances.

The HIRO program included several beneficial features. It allowed the transfer of mortgage insurance to the new loan and required simplified documentation for employment, income and assets. Both Desktop Underwriter® (DU®) and manual underwriting options were available, making the process more accessible.

To qualify, borrowers must have gained a tangible benefit from the refinance, similar to what HARP offered. However, Fannie Mae has temporarily paused the HIRO program due to low application volume and changes in the revised Qualified Mortgage Rule.

The Freddie Mac Enhanced Relief Refinance Mortgage (FMERR) was designed for homeowners with Freddie Mac mortgages who make on-time payments but cannot refinance through standard options due to high loan-to-value ratios.

FMERR catered to those whose property values had declined, offering greater flexibility in refinancing options. The maximum LTV ratio for adjustable-rate mortgages is 105%, while fixed-rate mortgages have no maximum loan-to-value ratio. Eligible products included conventional fixed-rate and adjustable-rate mortgages with application dates on or after November 1, 2018.

The program was available for all occupancy types, with specific minimum LTV ratios depending on the property type. For instance, a primary residence with one unit required an LTV of at least 97.01%. The mortgage must have been seasoned for at least 15 months, and the borrower must have had a solid payment history.

Due to extremely low volume and the impact of the revised Qualified Mortgage Rule, Freddie Mac has paused its purchase of Enhanced Relief Refinance Mortgages until further notice.

While HARP and its replacement programs are currently not available, homeowners still have various refinancing options to explore. These alternative loan assistance programs can help if you're struggling to manage your mortgage. Below is a table of different loan assistance options that might suit your needs.

Homeowners often have questions about mortgage loan assistance programs, especially when learning about their options after the end of HARP. To address these concerns, we've compiled answers to commonly asked questions about HARP, its replacement programs and other loan assistance refinancing options to clarify your options and help you find the best mortgage management solution.