What is HARP?
The Home Affordable Refinance Program, or HARP, was created in 2009 to help homeowners with little to no equity on their existing home to refinance into a lower mortgage rate, provided that they were current on their existing mortgage. The HARP program officially ended on December 31, 2018.
What is the Freddie Mac Enhanced Relief Program (FMERR)?
Freddie Mac started the Enhanced Relief Refinance (FMERR) program at the same time HARP ended (also when the HIRO program began). This program helped homeowners with little or no equity refinance into a mortgage with a lower rate. The FMERR program officially ended on September 30, 2019.
Can I still qualify for HARP or FMERR?
No, the Federal Housing Finance Agency ended the Home Affordable Refinance Program (HARP) on December 31, 2018. The end of Freddie Mac’s Enhanced Relief Refinance Program. (FMERR) on September 30 of 2019.
Are there any programs similar to HARP and FMERR that can help homeowners who now have low-equity or underwater mortgages?
Yes, the HARP replacement program became available after the HARP program ended. It is called the High LTV Refinance Option, or HIRO for short, and is administered by Fannie Mae.
What are the requirements of the HIRO program?
The HIRO program does have several requirements to be able to access the refinance option, including:
- Only existing Fannie Mae mortgages may be refinanced into a HIRO loan.
- Only loans that originated on or after October 1, 2017, are available.
- There must be a 15-month interim between when your initial loan originated and when the HIRO refinanced loan is opened.
- Mortgages that were previously refinanced under the HARP program are ineligible.
How do I know if I qualify for the HIRO Program?
When considering whether HIRO is an option available to you, several things must apply.
First, only existing mortgages can be approved in the HIRO program. Additionally, the refinance must provide for at least one of the following benefits:
- A lower interest rate.
- A lower monthly principal and interest monthly payment.
- A shorter loan term.
- The replacement of an Adjustable Rate Mortgage (ARM) with a fixed-rate mortgage.
What requirements are looked at when determining whether the existing loan is current?
With the HIRO program, only loans that are current and in good standing are eligible. This requirement means that the homeowner must have:
- Made the last 12 monthly payments on time.
- Had no payments that were 30 or more days late in the last six months.
- No more than one 30-day late payment made within the last year.
What benefits can be achieved by refinancing under the HARP replacement program – the HIRO program?
There are several key benefits that homeowners can enjoy when they refinance under the new replacement program. These benefits include:
- A lower interest rate.
- A lower monthly principal and interest payment.
- A shorter loan term.
- No mortgage insurance requirements.
- Simplified document requirements.
- Electronic and manual underwriting options.
Fannie Mae has also indicated that these loans are much faster and easier to process than a standard mortgage refinance.
What about the mortgage insurance on my current mortgage?
For borrowers with mortgage insurance, it must be transferred from the old one to the new at the same coverage rate. If you do not have mortgage insurance at the time of refinancing, you do not need to obtain it.
If your current mortgage insurance is lender-paid, that coverage can also be transferred.
What credit documents are necessary to obtain a HIRO refinance?
Fannie Mae has indicated that the HIRO program will only require simplified documentation concerning income, assets, and employment. Depending upon your current credit record, this could mean different things.
However, the program has no minimum credit score requirements, except for requiring one for loans that are underwritten using the Alternative Qualification Path. The rationale behind not requiring a minimum credit score is that the borrower is already required to have a good financial history concerning the property being refinanced.
One necessary element is the re-verification of income, which can be accomplished through the following methods:
- Verbal verification of current employment or self-employment by at least one of the listed borrowers.
- For non-employment income, such as Social Security or pension payments, the borrower will have to provide documentation of the income amounts.
- In the absence of other income, borrowers may also provide documentation of liquid financial reserves that can cover at least 12 months of the housing payment – including taxes, insurance, and other related expenses – under the new loan terms.
Will I need to provide bank statements for a HIRO loan?
No, generally, bank statements are not required, unless your payment increases by more than 20% or if you are removing a borrower for the loan.
Do I need to get a new appraisal done on my home?
Some loans refinanced under HIRO will require a new appraisal be completed, while others will not. The home appraisal determination is made by the lender when the borrower completes their full application. If a new appraisal is not required, the loan will receive an appraisal waiver. If a new appraisal waiver is needed, the borrower should not worry too much about the appraised value. It cannot come in too low to qualify for a HIRO refinance. The program does not have a maximum LTV.
What are the Loan-to-Value (LTV) restrictions for the HIRO program?
There is no maximum LTV for the HIRO refinance option, but there are minimum requirements. The guidelines put forth by Fannie Mae do say that the borrower must owe more than 97% of their home’s current value for a primary residence, single-family homes. For second homes, the LTV must exceed 90%; primary residences that include two units must exceed 85%, and both investment properties and primary residences with 3-4 units must exceed 75%.
What are the refinance rates currently with the HIRO program?
Rates are subject to change due to the regular changes in the economy. They can also vary from one lender to another. It is important to consider all of your options when considering a HIRO refinance.