HARP gets extension and FHFA announces new refinancing offering

by Chip Bell


The Home Affordable Refinance Program will not expire at the end of this year, as previously thought. The Federal Housing Finance Agency says it will continue through Sept. 2017.

FHFA’s announcement comes alongside news that Fannie Mae and Freddie Mac, at the agency’s direction, will implement “a new refinance offering aimed at borrowers with high loan-to-value ratios,” according to a release.

The new program will offer liquidity for mortgage holders currently unable to refinance through traditional programs because of a high LTV. To qualify, loan holders:

1. Must not have missed any mortgage payments in the previous six months.
2. Must not have missed more than one payment in the previous 12 months.
3. Must have a source of income.
4. Must receive a benefit from the refinance such as a reduction in their monthly mortgage payment.

FHFA Director Melvin Watt describes the program as an “opportunity” for both borrowers and Fannie and Freddie.

A new way to help homeowners…and Fannie and Freddie

“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for (Fannie and Freddie),” he says. “This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”

The agency’s new program is much like HARP, but the two will exist alongside each other rather than intersect. In the agency’s release it clarifies that “borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of (Fannie or Freddie’s) traditional refinance products.”

The new high LTV refinance program will not be available to borrowers until Oct. 2017. But to bridge HARP with the future program, the FHFA has instructed Fannie and Freddie to extend the affordable refinance program, which has already helped more than 3.4 million homeowners, through Sept. 30, 2017.

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