Nearly 3,000 households in Massachusetts have not yet taken advantage of a federal program created in the wake of the recession to help qualified homeowners refinance their mortgage debt, according to the Federal Housing Finance Agency (FHFA).
The Home Affordable Refinance Program (HARP) was created in 2009 to help qualifying borrowers the ability to refinance their mortgages into a lower interest rate and/or more stable mortgage product. The goal was to create refinancing opportunities for eligible borrowers while reducing risk for Fannie Mae and Freddie Mac. The program has been extended through the end of 2016.
HARP’s website provides an overview of where HARP-eligible loans are located. As of June of this year, the most recent data available, there were 429,379 borrowers identified nationwide: in Massachusetts, Worcester County had the most eligible loans with 900; Bristol County had 591; Hampden, 567; and Essex came in a distant fourth with 153.
The FHFA is trying to reach out to those borrowers. It has held events in cities with high concentrations of eligible borrowers and set up the website to help spread the word. Part of the difficult, according to HARP spokesman Stefani Johnson, is that homeowners may think the program is a scam.
“We’ve heard that since HARP was launched in 2009, people have received numerous solicitations and don’t know what to believe,” Johnson wrote in an email. “Or they think that the program seems too good to be true. But we have been leveraging trusted sources to get the message out that HARP is not a scam.”
Privacy concerns prevent the agency from simply contacting the borrowers directly, she added.
Seeking Qualified HARPers
To be eligible for the program, a loan must be insured by either Freddie Mac or Fannie Mae, the loan-to-value ratio must be 80 percent or greater, the borrower must be current with their payments, and the loan must have originated on or before May 31, 2009.
HARP does not lower the principal amount of the loan, but it can lower the interest rate or replace an adjustable rate with a fixed rate. According to the FHFA, it can save borrowers up to $200 per month by reducing or eliminating private mortgage insurance payments. PMI is based on the amount of the down payment of the original loan, regardless of the current home value.
Dawn Dawson, vice president of mortgage operations at Metro Credit Union, said Metro has refinanced about 150 mortgages through HARP. She said most of those customers either transferred their mortgage insurance or didn’t need it any longer because they had sufficient equity thanks to rising home values. Some needed to go through HARP because their debt-to-income ratio was too high for a typical refinance.
“It’s not much more work than any other loan,” Dawson said.
She said while the FHFA requires a loan-to-value of 80 percent or higher, some lenders apply stricter standards.
“I feel badly for the people who are out there who might have been denied refinancing because of their LTV, but don’t know they could qualify somewhere else,” Dawson said.
Metro COO Tom Nadeau said the credit union has done some outreach to try to encourage more people to refinance through the program.
“We would very much like to do more of them,” Nadeau said. “It’s a mutually beneficial relationship. We get a new customer and it definitely helps the consumer.”
Johnson said borrowers who are interested in taking advantage of the HARP program can be assured they are dealing with legitimate companies by going through HARP’s website.
HARP should not be confused with the FHA’s Home Affordable Modification Program (HAMP), which is designed to help homeowners at risk of foreclosure.
