It was announced on Monday that the government would revise the Home Affordable Refinance Program (HARP) and guarantee changes that, according to the Washington Post’s Zachary A. Goldforb, would “allow many more struggling borrowers to refinance their mortgages at today’s ultra-low rates, reducing monthly payments for some homeowners and potentially providing a modest boost to the economy.”
The HARP program was initially designed to help those who owe more than their houses in fact are worth. However, the program has only managed to reach less than one-tenth of the 5 million borrowers who are in the condition for which the HARP was planned. The revision announced on Monday plans to change certain aspects of the HARP in order to make the scenario better for those who are in debt.
One of the changes planned is to redefine who can be considered eligible for the HARP plan and earn a refinance of the mortgage. Once that is official, many of those who are in debt will be able to be approved by the HARP program. Also the cap which prevented those who owe more than 125% of what the house is worth was eliminated from the HARP.
Not everyone affected by the financial crisis is eligible to be included in the HARP, as the first step is to make sure that the mortgage is owned by Fannie Mae or Freddie Mac. Also, the mortgage has to have been sold to one of those by May 31, 2009. In order to be approved in the HARP, borrowers cannot have missed one of the mortgage payments in the past six months, and cannot have missed more than one in the past 12 months.
The first step to know if someone can even be considered for the HARP is making sure which institution owns the mortgage or is responsible for it. The revision which approved the changes is supposed to be published in November. However, the timing for each client can vary by lender.
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