Deconstructing HAMP and HARP. Why they still matter in 2015.
by Donny Mak
on Saturday, December 6th, 2014 at 1:00am.
Deconstructing HAMP and HARP
By: Alan Aptheker
Homeowners, by in large, haven’t taken the full advantage of the super-low mortgage rates to refinance their homes, for reasons ranging from dinged credit, to more stringent lending standards.
A couple of responses to this dilemma are worth a re-look: The Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP). They both were established in 2009, and as we move into 2015, time for some remedial reading about HARP and HAMP.
HARP is a lifeline for qualifying borrowers who are current on their payments, and whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac and can refinance even if they have insufficient equity to qualify for a traditional refinance.
To qualify, just two things need apply. You had to have gotten your mortgage before May 31, 2009, (so that includes a big number of borrowers who got an ARM before the decline of the subprime market), and you to have been current over the preceding year.
Like HARP, the Home Affordable Modification Program (HAMP) was also designed to help homeowners stay in their homes, but instead of refinancing, they could avoid the pain of foreclosure by modifying an existing mortgage. Banks will either extend the term, reduce the interest rate, or reduce the principal.
For example, the median monthly payment after a permanent HAMP modification is about $831, compared with about $1,423 before the modification.