The federal government has created several programs aimed at helping homeowners, and not all of those programs are devoted to people who have fallen behind on their mortgage payments and are seeking alternatives to foreclosure.

The Home Affordable Refinance Program (HARP) provides an option for homeowners who have been unable to refinance their existing mortgages because of a drop in property values. The refinancing problem stems from the unwillingness of lenders to offer loan amounts that exceed 80 percent of a home’s appraised value. As a consequence, affected homeowners have been unable to take advantage of lower interest rates and better loan terms.

HARP enables refinancing when loan-to-value ratios exceed 80 percent. In fact, only borrowers with ratios in excess of 80 percent are eligible for the program.

There are several other criteria that borrowers must meet in order to be eligible:


Fannie Mae or Freddie Mac must own or guaranty the mortgage.
  • The mortgage must have been purchased by one of those entities on or before May 31, 2009.
Except for loans that were refinanced under HARP by Fannie Mae between March 2009 and May 2009, the loan cannot have been previously subject to a HARP refinance.
Borrowers must be current in their payments and have an acceptable payment history.

Under the fourth criterion, a payment history will qualify if there were no delinquent payments during the immediately preceding six months or if, in the six months before that, not more than one payment was over 30 days late.

HARP loans still require loan applications, verifications of employment and credit reports, but the underwriting criteria are more flexible than those that apply to conventional refinancing. Appraisal requirements vary with individual lenders, but the program generally allows the loan to be processed on the basis of an automated appraisal, provided it meets reliability standards.

While HARP places no limit on the amount by which the loan amount can exceed the value of the property, HARP loans are still subject to the dollar limits that apply to conforming loans, and those limits vary by location. In addition, there are some limits placed on the type of loan that will be available. For example, a fixed-rate loan may be required if the loan-to-value ratio exceeds 125 percent. Even then, there is some flexibility, and terms of 15, 20 and 30 years are available.


Daniel Beer is the Elegant Homes Director for Real Living Lifestyles and the founder of the San Diego Home Finder Team (

This article reflects the personal opinion and expertise of the mentioned author and not that of