What Is the Home Affordable Refinance Program (HARP)?
Let me explain what the Home Affordable Refinance Program, or HARP, really was. It was a federal program from the Federal Housing Finance Agency aimed at homeowners whose homes were worth less than what they still owed on their loans. You know, those underwater situations that hit hard after the 2008 financial crisis.
The program is over now—it wrapped up in December 2018—but its goal was straightforward: give relief to folks dealing with dropping home values by letting them refinance their mortgages. If you're underwater today, meaning you owe more on your home than it's currently worth, don't worry; there are still other options out there for you.
Key Takeaways
- HARP came from the Federal Housing Finance Agency to help homeowners with homes worth less than their loan balances.
- It was meant as relief following the 2008 financial crisis.
- HARP ended in December 2018, but underwater borrowers have alternative refinance paths available.
Understanding the Home Affordable Refinance Program (HARP)
Here's the deal on how HARP worked: it was specifically for mortgages backed by Freddie Mac or Fannie Mae. To qualify, your mortgage had to have been sold to one of them before May 31, 2009. I remember the 2008 crisis wrecked real estate values across the U.S., leaving tons of homeowners upside down—owing more on their loans than their properties were worth. That's what 'underwater' means in this context: the collateral, your home, is valued below the loan amount.
The government rolled out HARP in 2009 to curb foreclosures and support borrowers hurt by shady subprime lending. But it wasn't for everyone—you had to meet strict criteria. You needed to be current on your mortgage payments, and your property had to be in decent shape. If you'd already defaulted or abandoned the place, you were out of luck. Any lender participating in the program could handle your refinance; you didn't have to stick with your original one. Just so you know, the whole thing shut down on December 31, 2018.
Home Affordable Refinance Program (HARP) vs. Home Affordable Modification Program
Now, let's compare HARP to another program that came out around the same time to fight foreclosures: the Home Affordable Modification Program, or HAMP. HAMP ended earlier, in 2016, and it was geared toward borrowers who'd already defaulted or were about to. Unlike HARP, which was a straight refinance, HAMP involved modifying your existing loan terms through your current lender only, and each lender set their own rules for who qualified.
Keep in mind, a modification isn't the same as refinancing—it alters the mortgage note but can show up on your credit report as changed terms, which might hurt your future borrowing power. Plus, if part of your debt gets forgiven in the process, the IRS could treat that as taxable income, hitting you with an extra tax bill. So, if you're looking at options today, weigh these differences carefully.
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