Fannie Mae Announces HARP Milestone, Program Has Helped Millions
Jan 15, 2016
In 2009, the U.S. government established the Home Affordable Refinance Program, or HARP, during the depths of the housing crisis when many homeowners were “underwater” — owing more on their mortgage than their home was worth. Typically, banks would not refinance these mortgages. However, HARP allowed these borrowers to refinance. Additionally, the HARP program made the process easy since it did not require an appraisal or significant loan documentation.
Since the advent of the HARP program, homeowners have saved more than $12 billion. This translates to a $193 average monthly savings per borrower, or more than $2,300 per year.
Refinancing through HARP also makes it more likely that the loan will continue to perform. The delinquency rate for a HARP loan is about half that for a loan that was eligible for the HARP program but did not utilize HARP.
“HARP gives homeowners an opportunity to refinance their home even if the value of the property has declined significantly. This way they can better manage their financial situations and continue to support their families,” says Andrew Bon Salle, executive vice president for the single family business at Fannie Mae. “The 2 million household milestone is one we’re proud of at Fannie Mae, but our work is not done,” says Bon Salle. “Homeowners who have loans from before 2009 and haven’t refinanced should contact a lender immediately to determine their options.”
Lisa Foradori, managing director and head of Mortgage Banking Consumer Direct at JPMorgan Chase & Co., notes, “It’s our job to help customers get into their home and to make sure that loan is affordable now and in the future. So making the HARP loan process an easy one is really important.”
In many cases, homeowners were not aware of HARP and were surprised by the ease with which they could apply and take advantage of it. Says Foradori: “Our customers couldn’t believe this refinance option was being made available to them, and it came at exactly the right time with rates being as low as they are.”
“We spent a lot of time very early on communicating the program’s benefits to our customers and as a result have done did a significant volume of refinances through HARP. Customers don’t always realize how much money they have on the table so we continue using a lot of outreach tactics to explain the value to our customers,” she adds.
Homeowners, too, appreciate the program’s simplicity. Frank, a U.S. government employee and military veteran in the Philadelphia area, received a HARP loan in 2011 that “stopped the bleeding” after repurchasing his house following a divorce, when the home was underwater. His interest rate went from about 6 percent to about 4 percent, saving him a considerable amount each month.
The lower mortgage payments helped him remain in his home. “I was upside down in a higher rate, and the home was becoming unaffordable,” notes Frank. “Being the veteran of war several times in Iraq, this program definitely gave us the right path to get on our feet. Instead of being a liability to the country, I was able to be an asset for the country.”
Ruben of Springfield, VA, also a veteran, was able to refinance his home in three weeks after trying for four years to stay afloat when he was transferred from his post in Sacramento, CA, to the East Coast. He saved $763 per month. “Whether you’re looking to refinance a property you live in or an investment property, find out if you qualify for this amazing program,” he says.
In many cases, homeowners were not aware of HARP and were surprised by the ease with which they could apply and take advantage of it. Says Foradori: “They couldn’t believe this was being made available to them, and it came at exactly the right time for them to be able to tap into it.”
Indeed, some borrowers had no idea they could qualify for a HARP loan or that the program’s requirements have changed over time.
Paul and Cherie, a couple in Moreno Valley, CA, hit hard by the recession in 2012, were able to refinance their home in 2013 and save $305 per month. Like Frank and Ruben, they were pleasantly surprised: “We were afraid we wouldn’t qualify, but we did. Do yourself a favor and make the call to find out if you’ll qualify,” Paul says. “You have nothing to lose and could save significantly by trying.”
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