As part of the Emergency Economic Stabilization Act, the Obama Administration implemented the Home Affordable Refinance Program (HARP). Under HARP, eligible borrowers are entitled to refinance their mortgage at a lower interest rate. The program does not reduce principal, but it does reduce monthly payments.
Visit the Making Home Affordable government website for more information and links to Fannie and Freddie which have tools on their sites which will allow you to determine if either owns your loan and if it was acquired prior to June 1, 2009. The essential requirements under the HARP program are:
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March to May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
To calculate the loan to value ratio, simply divide the total unpaid balance of the mortgage by present fair market value of your home. If the total is 80% or more, the ratio qualifies. You may also contact your loan servicer, i.e., the entity which accepts your payments, to determine if you are eligible.