Have you ever gotten email telling you that you might qualify for HARP? I do. I get them all the time, in fact. I’ve often wondered why I get them in the first place, since, as a HUD-certified housing counselor, I happen to know that HARP is of zero relevance to me, personally. But I suppose that answers my question, doesn’t it? I get those e-mails likely because someone is trying to scam me…
Here’s the deal: HARP, itself, is totally legitimate. It’s actually a great program (if you qualify for it) and can be of great help in easing the financial stress of a mortgage that probably wasn’t so hot when it was signed off on. But the “companies” sending out e-mails telling you that you qualify for HARP are more than likely not legit. I’ll explain why as we go along.
HARP stands for Home Affordable Refinance Program and it’s part of MHA (Making Home Affordable), which is a government program designed specifically to help people who were negatively impacted by the housing bubble bursting. That last bit is important: it’s related to the housing bubble. In order to qualify for HARP in the first place, you need to have originated your mortgage prior to May 31st, 2009. The fact that I didn’t buy my home until 2012 already means I don’t qualify—and it’s a huge red flag regarding the sender of that e-mail.
MHA is a program that is specifically tied to Fannie Mae and Freddie Mac loans, as well, so if your investor isn’t one of those two entities, you also wouldn’t qualify. Since my mortgage is an FHA loan, it’s therefore not Fannie- or Freddie-backed and doesn’t qualify. Strike two against the e-mailer. (Incidentally, FHA does have a similar option—but it’s not called HARP, so if you have an FHA loan and are wondering if you qualify for any program that can lower your interest rate, talk to your mortgage company.)
If you did qualify, what HARP could do for you is to refinance your home at the current prime rate with no closing costs. You see, when the housing bubble was in the process of growing to the point of blowing up, people were getting huge loans on inflated property values that were realistically unsustainable. And in those days, interest rates on home loans were much higher than they are now, often 7-8% or more. Today’s prime rate is somewhere in the neighborhood of 4%. Bad news, e-mailer: I bought my home in a particularly strong buyer’s market with great credit, which means that my interest rate is already lower than 4%. Strike three. You are out, e-mailer. You are OUT.
The list of HARP qualifications looks mostly like this:
- Your mortgage is owned by Fannie or Freddie
- It was originated prior to May 31st, 2009
- It has an interest rate over today’s prime rate
- You have made at least 6 on-time payments with no more than one late payment within the past 12 months
- The mortgage can’t 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 of the home must be greater than 80%.
If you’re not sure if you fit the above qualifications but want to find out, there are a few places to collect some info about your mortgage:
1.) Determine who your Investor is and where the Loan was Originated
- Click HERE to find out if your loan is owned by Fannie Mae here.
- Click HERE to find out if Freddie owns it here.
2.) Examine your Mortgage Statement
- Your mortgage statement can tell you both when the loan was originated (as can the links above) and can also give you the numbers you need to figure out your loan-to-value (for example, if your loan is for $85,000 on a $100,000 home, you’re at 85%.)
3.) Call your Servicer
- Rather than trusting an alternate lender who blindly e-mailed you out of the blue, just ask your servicer if you qualify. You can look up which servicers are taking part in MHA by visiting the MHA website or click HERE.
- While you’re at it, since you’re already on MHA’s website, you can read more about HARP here.
- Additionally, you can read about HAMP which is the Home Affordable Modification Program at MHA’s website, as well. HAMP is a different program with somewhat-similar goals that is also pretty great—but that’s maybe another blog post.
So, as with all e-mail that you get in the scam-laden world we unfortunately are living in, be wary—but don’t be wary of HARP, in itself. HARP is the real deal and has helped thousands of home-owners retain and afford their homes. The folks sending you e-mails are probably not the real deal and you should be careful regarding them. Get your info from a trustworthy source (like me!) and move forward in confidence. Don’t trust the, “I’m not a doctor, but I’ll take a look at it,” source. Talk to your servicer, check out those websites, and take advantage of this great program.
Author Dan Szymczak is a Certified Housing Counselor at LSS Financial Counseling and specializes in understanding programs like these. Give us a call at 888.577.2227 and talk with a counselor today. We can help you take a realistic look at your financial situation and understand your housing options.