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HARP Replacement Programs: Refinance Alternatives for 2023

Programs to Replace HARP for Homeowners

In response to the housing crisis, the Home Affordable Refinance Program (HARP) was formed to allow homeowners with little or no equity to refinance.

Thankfully, property prices have increased gradually over the past few years. And the number of homeowners underwater has decreased significantly. Consequently, millions of homeowners may refinance at today’s cheap rates.

Even if you’ve had an underwater loan in the past, it’s a good idea to reevaluate your eligibility. You may be astonished by the amount of equity you’ve acquired during the previous year.

Are There HARP Replacement Programs?

The HARP program was terminated in 2018. Since then, more refinancing assistance schemes for homeowners with little or no equity have been developed. This category includes the Freddie Mac Enhanced Relief Refinance, the Fannie Mae HIRO program, and the Streamline Refinance for FHA, VA, and USDA loans.

However, as home prices continue to rise, the necessity for these HARP replacement schemes diminishes.

Numerous homeowners need to be made aware that their equity has risen. However, growing property values benefit all homeowners, even those without the intention of selling.

If the value of your property has improved since you purchased it, there is a high possibility that you now have enough equity to refinance.

Even homeowners who had no equity or were underwater in the past may be eligible for a refinance due to the tremendous increase in property values across the nation.

Determine your eligibility for refinancing if you are still paying a higher-than-average mortgage rate. Currently, interest rates are sufficiently low for millions of homeowners to reduce their rates and monthly payments.

Relief Refinance Program Advantages

These initiatives are designed to assist homeowners currently paying above-market mortgage rates but cannot refinance due to insufficient equity.

The most significant advantage is that eligible borrowers can refinance into a loan with a reduced interest rate and monthly payment, enabling them to afford housing bills and avoid foreclosure.

However, there are additional benefits to employing HIRO or FMERR. For instance:

  • There is no maximum LTV ratio for the new loan if the refinanced house loan is a fixed-rate mortgage. Thus, if your mortgage is $150,000 and your property is only worth $130,000, you might refinance despite having a loan-to-value ratio of 115%.
  • No requirement for private mortgage insurance (PMI) — If you currently have PMI on your loan, you must transfer it to the new loan. But if you do not presently have PMI, you will not be required to pay it on the new loan.
  • Streamlined application procedure – Due to reduced paperwork requirements, you may not be required to provide proof of your income, assets, or liabilities. Neither a minimum credit score nor a maximum debt-to-income ratio is required.
  • Electronic and manual underwriting alternatives are accessible to the same or a different servicer, so you are not required to employ your present lender (meaning you can shop for the best rate on your high-LTV mortgage)

These loans eliminate several qualifying conditions for a typical refinance. They are frequently a quicker and more economical alternative for consumers to obtain a reduced interest rate and mortgage payment.

FMERR Eligibility (The HARP Successor for Freddie Mac)

To be eligible for FMERR, Freddie Mac’s Enhanced Relief Refinance program, your current mortgage must be held by Freddie Mac. (You may verify your status using Freddie’s loan lookup tool.)

High loan-to-value ratios are required for this financing. Therefore, you must exceed Freddie’s minimum LTV criteria of 97.01% for a single-family house. Here is a comprehensive list of FMERR LTV standards per property type.

Additionally, FMERR regulations state:

  • To qualify, your existing loan must have originated on or after November 1, 2018,
  • At least 15 months must have passed since the origination of your current loan.
  • You must have made NO late payments in the previous six months and no more than one in the last twelve months.

The FMERR program is available to homeowners with second houses, investment properties, and primary residences. Additionally, it may be used to refinance a property with one, two, three, or four units.

No maximum LTV applies to fixed-rate mortgages. However, if your current loan is an adjustable-rate mortgage, the maximum LTV for FMERR is 105%.

HIRO Eligibility (Fannie Mae’s HARP Successor)

Fannie Mae must hold your mortgage to qualify for the Fannie Mae High LTV Refinance Option (HIRO). (Utilize Fannie Mae’s loan lookup tool to see whether the organization owns your loan.)

In all other respects, Fannie’s standards for HIRO are essentially identical to Freddie’s for FMERR.

  • Your existing loan must have originated after October 1, 2017
  • At least 15 months must have passed since the origination of your current loan.
  • You must have made NO late payments in the previous six months and no more than one in the last twelve months.

Fannie Mae also mandates a minimum LTV ratio of 97.01% for owner-occupied single-family homes.

In contrast, the High-LTV Refinance Option is more accommodating than FMERR regarding 2-4-unit homes. To qualify, the minimal LTV might be as low as 75.01%.

You Need a ‘Net Tangible Advantage’ to Be Refi-Eligible

To qualify for any of the HARP replacement schemes, a “net tangible benefit” is required. This implies that you are only qualified if the refinancing would enhance your financial status.

The new mortgage must provide at least one of the following advantages:

  • A decrease in mortgage interest rates
  • Reduced principle and interest payments monthly
  • Reduced loan duration
  • The substitution of a fixed-rate mortgage for an adjustable-rate mortgage

There is a considerable likelihood that you will fulfill the net tangible benefit criteria if current mortgage rates are much lower than your current rate.

High LTV Refinance Appraisals

If your loan application can be underwritten online (as is the case in most situations), you can forego the appraisal. This implies you will not be required to pay for an appraisal as part of your refinance. Typically, appraisals cost $400 or more.

Fannie Mae states, “For certain loan casefiles, DU* will offer an appraisal waiver, allowing the loan to be sent to Fannie Mae without an appraisal. Otherwise, a check of the inside and exterior is necessary. If an appraisal is acquired, it must be utilized for valuation even if DU offers a waiver.”

Therefore, if you obtain an appraisal as part of your refinance, 1) you must pay for it, and 2) the lender must utilize the assessed value in your application. Therefore, don’t let someone order an assessment unless you are certain you have not received a waiver.

Regarding Mortgage Insurance:

If you already have private mortgage insurance, it must be transferred to the new loan at the same coverage rate, according to Freddie Mac’s and Fannie Mae’s HARP replacement programs. However, if you do not currently pay PMI, your new mortgage will not be required.

Your coverage for lender-paid mortgage insurance (LPMI) can also be transferred.

The standards for one national mortgage insurer (Genworth) state that it would continue to cover Fannie Mae-compliant mortgages, including High-LTV Refinances. Consequently, mortgage insurers will not impede your refinancing under these schemes.

HARP Replacement Program FAQ

Who Is Eligible for a Harp Alternative Program?

HARP replacement options exist for homeowners with conventional mortgages who lack sufficient equity to refinance. Typically, you must have a loan-to-value ratio of greater than 97% (meaning you have less than 3% equity in the house) to qualify. Additionally, you must have made on-time payments for the last year, which must have been at least 15 months after you purchased or refinanced your house.

What Is the Current Program to Replace HARP?

FMERR is the substitute for HARP for Freddie Mac borrowers. This abbreviation means “Freddie Mac Enhanced Relief Refinance” HIRO, which stands for ‘High LTV Refinance Option,’ is the program that replaces HARP for Fannie Mae customers. FHA, VA, and USDA borrowers may investigate Streamline refinancing alternatives, such as the VA IRRRL for VA mortgages.

Is the HARP Alternative Program Valid?

Yes, HARP replacement programs. The Federal Housing Finance Agency regulates FMERR and HIRO, legal mortgage agencies. Mortgage lenders around the nation offer these programs.

When Did the HARP Program Come to an End?

The Home Affordable Refinance Program (HARP) concluded on December 31, 2018.

Am I Eligible to Refinance My HARP Loan?

According to Fannie and Freddie’s criteria, you are not eligible for the HIRO or FMERR programs if you have already utilized the HARP refinance program.

Did Congress Adopt a Scheme to Assist Homeowners?

During the COVID epidemic, Congress has authorized many homeowner assistance initiatives. However, these techniques give only a brief payment alleviation. The HARP successor programs FMERR and HIRO for underwater homes offer permanent payment relief.

What Is the Minimum Credit Score Required to Qualify for Harp Replacement Programs?

The programs of neither Fannie Mae nor Freddie Mac have an official minimum credit score. However, mortgage lenders are permitted to establish their minimum credit scores. If your credit score is an issue, inquire with lenders about their FMERR or HIRO criteria before applying.

What Is the Middle Class’s Mortgage Stimulus?

There is no mortgage relief program designed specifically for the middle class. However, Fannie Mae and Freddie Mac’s HARP replacement programs might assist middle-class homeowners who have yet to benefit from growing property values and need to reduce their mortgage payments.

Check Your Eligibility to Refinance

Existing refinancing schemes can provide homeowners with affordability issues with assistance. Refinancing enables customers to lock in a reduced rate and monthly payment for the long term while mortgage rates remain at record lows.


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