As the dust settles after November’s Presidential election, the housing industry is keeping a close eye on which housing-related policies and programs from President Barack Obama’s first term will survive, and in what form. One holdover is HARP (Home Affordable Refinance Program), designed to help struggling homeowners to refinance their property and avoid foreclosure. Now dubbed HARP 2.0, this government backed refinancing program is available not just to homeowners struggling to keep their primary residence, but to income property investors as well.
First started in 2009, HARP, also called the Making Home Affordable plan, the Obama Refi Plan, or Relief Refinance, allows property owners to refinance their properties without paying down the principal and having to pay mortgage insurance. Originally intended to help homeowners in danger of going “underwater” on their primary residence, HARP’s provisions are also available to individual investors.
In order to qualify for HARP refinancing help, a property owner must simply meet two basic criteria. The mortgage must have a securitization date prior to June 1, 2009, and it must be backed by either Fannie Mae or Freddie Mac, the government’s two mortgage superagencies. Whether a property is used for a primary residence, a second home, or a rental property, it can be refinanced under the terms of HARP as long as these two conditions are met.
The primary mortgage type supported by HARP is the 30-year fixed rate mortgage recommended by Jason Hartman for income properties. Although adjusted rate mortgages (ARMs) may also qualify under some circumstances, the program doesn’t work with jumbo mortgages or specialized types such as Alt-A or subprime mortgages. Also, mortgage payments must be current in order to qualify.
Determining whether a mortgage is financed by either Fannie Mae or Freddie Mac can take some detective work. Many of these loans are ‘serviced” by secondary financial institutions such as Chase, Wells Fargo or Bank of America – agencies that simply collect payments for loans backed by those government entities, rather than issuing loans of their own. Websites for Fannie Mae and Freddie Mac offer “lookup” forms that allow mortgage holders to track the origins of their loans.
Although loans backed by other government bodies such as the FHA, VA or USDA aren’t eligible for HARP, some of these agencies have their own versions of the program. For example, the FHA offers the FHA Streamline Refinance program, with similar eligibility standards.
Since HARP, in its various incarnations, is intended to shore up the shaky housing industry and lower the rate of foreclosures and short sales, it’s likely to be around for a while. Talks are beginning in Congress about HARP 3.0 – an expanded version of the program that would include loan types not covered under HARP 2.0 and provide more options for homeowners and investors working with Jason Hartman’s investing guidelines. (Top image: Flickr | LuisAlves)
The Jason Hartman Team