Some people are asking, "What is HARP?"
Actually, this is a good question, because not everyone understands any version of the Home Affordable Refinance Program (HARP), but the program underwent a transformation in 2013. So even those who understood the original version might not completely understand the 2013 version of HARP, often dubbed HARP 2.0.
This program was created by the United States Departments of the Treasury & Housing and Urban Development.
Quick Explanation
HARP was designed to help people who were paying their mortgages on their homes reliably, but they were paying too much for their assets.
Why was HARP created?
Some people have suggested that HARP was created to have people decide to refinance their mortgages and stay in their homes rather than leaving their homes via a "strategic foreclosure."
A strategic foreclosure was popular for a few years after the "big real estate crash" late last decade, beginning around 2007 or so. People's home values were declining so quickly, many people suddenly were "underwater," meaning they owed more on their remaining mortgage than their home was worth, even after living in it for several years.
In particular, this was a large problem in the Metro Detroit Area. It was even more common within the City of Detroit, because those home values plummeted to values below $20,000 in many cases (even on homes that were purchased for over $100,000 just a few years earlier).
Therefore, people were leaving their homes and buying these much less expensive homes with cash and taking the hit on their credit.
This caused all sorts of problems with Detroit Area real estate values, and it really hurt the banks. It hurt the banks badly enough that some banks are no longer in business. Several larger banks got government assistance.
This is a bad thing!
Therefore, this author believes that the Home Affordable Refinance Program (HARP) was created to help people WANT stay in their homes, because with the help of this program, it became a more financially responsible decision.
How did HARP help?
HARP helped in a major way. Essentially, this program provides government assistance to help banks and people refinance homes at TODAY'S prices, which are MUCH LOWER than yesterday's prices...when many of these mortgages were created.
What is HARP, really?
According to the HARPProgram.org site,
"The Home Affordable Refinance Program, also known as HARP, is a federal program of the United States, set up by the Federal Housing Finance Agency in March 2009 to help underwater and near-underwater homeowners refinance their mortgages."
This basically is a program to help people who are in trouble with their mortgages through no fault of their own.
For more information, you can visit either of these websites:
http://www.makinghomeaffordable.gov
http://harpprogram.org
Who qualifies for refinancing via HARP?
According to the MakingHomesAffordable.org site, the qualifications (which are are only meant to serve as guidelines--not official criteria--meet with a mortgage professional for this) at the time of this blog post are...
--The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
--The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
--The mortgage cannot have been refinanced under HARP previously unless it
is a Fannie Mae loan that was refinanced under HARP from March-May,
2009.
--The current loan-to-value (LTV) ratio must be greater than 80%.
--The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
This is not really a program having anything to do with first time home buyers in Detroit, but it might help several people living in or near Detroit.
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