The Presidents HARP 3.0 plan

The original HARP program enabled 14 million homeowners to refinance their homes.  With the 2.0 update, this honed in on barriers and aimed to eliminate them, this number doubled.  The upcoming 3.0 update is aimed at non Fannie or Freddie backed mortgages, streamlining the refinancing process, eliminating appraisals, and loan-to-value requirements. It also allows for those with mortgages that are not backed by the government to obtain a refinance as long as they are employed, have fair credit, and are up to date on their mortgage.  If the past is any indicator, HARP 3.0 has a bright future ahead of it.

About HARP 3.0

The Obama administration is trying to make it easier for homeowners to actually stay in their homes.  The economy has not been kind to many, and the introduction of the Home Affordable Refinance Program has helped millions.  The original idea was for the program to allow homeowners to:

  • Refinance at the lowers rates available today
  • Rebuild equity in their home
  • Apply for a refinance through a streamlined process

Maze-shortcutHARP 2.0 removed LTV caps, while HARP 3.0 will allow those with non-Freddie Mac and Fannie Mae backed mortgages to refinance using the program. Eligibility is fair and uncomplicated.  To be eligible, the homeowner must have no missed payments over the past 6 months, and no more than one missed payment in the 6 months previous.  They must have a current FICO score of 580, which is true of 9/10 of borrowers.  The home value cannot be more than area median values as determined by FHA conforming loan limits, and the home being refinanced must be a single family, owner occupied principal residence.

How Does HARP 3.0 Help?

Not only can refinancing at lower interest rates help people stay in their homes by reducing their monthly payment, but it can help those who are upside down on their mortgage rebuild equity in their home.  This is done by choosing to reduce the interest as well as the term of the mortgage, so that the monthly payment remains close to the same, more of the payment is applied to principal.  With HARP 3.0, those who choose this method as an incentive, are relieved of closing costs.

HARP 3.0 will also make it easier for homeowners to actually stay in their homes when out of work.  It will allow for up to 12 months forbearance when laid off, and due to this precedent set by the Obama administration, it is becoming the norm for many lenders.  The idea is that job hunting will not be impeded by the loss of the home or fear thereof.

HARP 3.0 is not Just for Homeowners

Homeowners are not the only ones that benefit from HARP 3.0.  More than a million construction workers are still out of work in the wake of the housing crisis, and this program is designed to get the housing market back on its feet and get these guys back to work.  The pilot program will auction off foreclosed homes to investors as rental property, and the proposed $15 billion budget will put construction workers back to work refurbishing and rehabilitating thousands of vacant foreclosed businesses and homes.

Homeowner’s Rights

The program also allows for the development of a “Bill of Rights” for homeowners, which includes the right to:

  • Simple, easy to read forms
  • Assistance if at-risk
  • Safeguards against inappropriate foreclosure
  • No conflicts of interest

Separately but related, the formation of the Residential Mortgage Backed Securities Working Group is formed under the Financial Fraud Enforcement Task Force to investigate instances of mortgage misconduct.