Will HARP 3.0 Pass? (Updated Guidelines And Eligibility)

By James Young on July 1, 2013
Will HARP 3.0 Pass? (Updated Guidelines And Eligibility)

Millions of “underwater” homeowners are wondering, “will HARP 3.0 pass”?

Just as the government’s popular Home Affordable Modification Program (HAMP) has made news recently with the announcement that the program will be extended through 2015, the equally popular Home Affordable Refinance Program (HARP) has also been under consideration for sweeping changes that would make more underwater homeowners eligible to refinance their mortgages without having to take out expensive private mortgage insurance.

Initially implemented in 2009, HARP is in its second iteration – HARP 2.0 – and has reached millions of struggling homeowners who’ve found it difficult to make their mortgage payments, especially as housing prices plummeted in recent years.

With experts forecasting a “HAMP-like” extension of HARP to 2015, new proposed legislation called the responsible Homeowner Refinancing Act of 2013 (a.k.a., HARP 3.0) would expand the program and make it more accessible to a greater number of homeowners.

HARP 3.0′s Proposed Updated Guidelines And Eligibility:

  • Allow so-called Alt-A and subprime mortgages into the program: While nearly all mortgages written today are underwritten by the government through Fannie Mae or Freddie Mac programs, a few years ago many mortgages were made via non-government lenders, many of whom offered attractive rates that were even lower than government-backed mortgages. That means that even those who could qualify for prime mortgages opted for subprime products to cash in on lower rates. Harp 3.0, as the new legislations is being called, would allow homeowners with non-government-backed mortgages to apply for relief under the program. (Alt A refers to loans that were made with only stated income and either stated of verified assets, low documentation and even no documentation).
  • Allow multiple HARP refinances. During the last few years when mortgage rates were falling, homeowners who had not used HARP were able to refinance as often as they pleased to lock in lower rates. Those who had used HARP were unable to refinance again to lock in lower rates. Under the new legislation, HARP homeowners could be eligible for another HARP refinance after making six payments to their lender.
  • Allow more recent mortgages to be eligible. In addition to being underwritten by Fannie Mae or Freddie Mac, HARP also only applies to those whose mortgages were written on or before May 31, 2009. The new rules would also apply to homeowners whose mortgages were written after that date.

Will HARP 3.0 Pass?

Although HARP 3.0 seemed likely to pass earlier in the year, recent economic data has been much more promising and the housing market has seen considerable growth, both in terms of number of sales and increasing prices. Both of these factors mean it may make the legislation more difficult to pass without significant changes, if at all.

Most significantly, rising interest rates and the sheer number of underwater homeowners in need of assistance bode well for the likelihood of HARP 3.0 becoming a reality, very soon. Being a great program, that’s helped a lot of homeowners, we sure hope it does!

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About James Young

My name is James Young- I love red wine, sailing, and playing guitar. I believe that everyday is truly a gift. I'm blessed to live five minutes from the sand in the beautiful city of Long Beach, CA. When I'm not assisting homeowners, you'll find me belting melodies with friends around a campfire, wandering the halls of an art exhibit, or watching ESPN re-runs until the sun comes up. So what am I doing here, you might ask? In a couple of sentences- I'm passionate about empowering first-time and experienced home buyers to make their dreams a reality. Whether it's saving thousands on your home loan, buying your first home, or acquiring your first investment property, I'm always here to help. Don't hesitate to ask questions, and please remember to "share the love"! :) #loveloans #loverealestate #lovelife!
  • Maura White