Ask Our Broker With Peter G. Miller
By Peter G. Miller
CTW Features
Question: We have an older loan and big problems. We have not been able to refinance, in large measure because local real estate values seem stuck. We owe more than the house is worth and worry that we will never be able to get better financing. What can we do to get out of this mess and refinance at today’s lower rates?
Answer: The government created a program known as the Home Affordable Refinance Program (HARP) that can help a limited number of homeowners who otherwise would not be considered for traditional loans.
The housing market essentially collapsed in 2007-2008 and in 2009 the government introduced HARP to help underwater borrowers. Unfortunately, the original requirements were strange: you needed a 125 percent loan to value ratio (LTV) to qualify.
This means if your property was worth $200,000, you could only qualify for the program if you owed at least $250,000. If your property was worth $200,000 and you owed $201,000 there would be no federal help. Plus, traditional lenders would not refinance a property that was financially upside-down.
To its credit, the government kept working on the HARP. It eventually reduced the level of qualifying debt to an 80 percent LTV and allowed small investors to participate.
With better guidelines, the program helped many borrowers with toxic or upside-down loans refinance; some three million homeowners, according to the Federal Housing Finance Agency. The government estimates an additional 300,000 borrowers still qualify for the program, but they need to hurry because HARP ends September 30, 2017.
According to the government the current HARP requirements look like this:
* You are current on your mortgage, with no 30-day+ late payments in the last six months and no more than one in the past 12 months
* Your home is your primary residence, a 1-unit second home or a 1- to 4-unit investment property.
* Freddie Mac or Fannie Mae owns your loan.
* Your loan was originated on or before May 31, 2009.
* Your current LTV ratio must be greater than 80 percent.
You can find out if Fannie Mae or Freddie Mac owns your mortgage, and the date it was originated, by going to the links at https://www.harp.gov/eligibility
If you have looked at the HARP program in the past and it would not work for you, take another look. The program has been tweaked over time and you might qualify today. If your loan was originated after May 31st, 2009, HARP won’t work for you and that’s a real problem.
Why should assistance be limited to loans originated prior to mid-2009? The fallout from the financial meltdown is still felt today, but for many borrowers, the arbitrary 2009 cut-off date is a harsh reminder regarding the limits of government assistance for individual homeowners.
© CTW Features
Peter G. Miller is author of “The Common-Sense Mortgage,” (Kindle 2016). Have a question? Please write to [email protected].

