The Home Affordable Refinance Program (HARP) was started in early 2009 for homeowners who wanted to refinance but were thwarted because of declining home values. The program was initially aimed at loans that had been originated prior to March of 2009, and allowed for a home’s value to come in at 25 percent below that mortgage amount.
In March of 2012, the government release HARP 2.0, which allowed lenders to do refinance loans that were originated prior to May of 2009 and lifted the limit as to how low the value of the home could be relative to the mortgage.
But the problem that we have been seeing recently is that borrowers that purchase or refinanced after May of 2009, when rates where around 5 percent, are not able to refinance because they are beyond the May 2009 cutoff. There are tens of thousands of borrowers in this category who cannot take advantage of today’s record low interest rates.
HARP 3.0, if it were to come out, would effectively eliminate the May 2009 cutoff and would allow homeowners who have been prevented from taking advantage of the record low rates to do so. This would then translate into a healthier economy.
Being that this is an election year, I believe that there is a good chance that we could see this.
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