FREDDIE MAC
Relief Renance
SM
/Home Affordable Renance Program (HARP)
Helps responsible borrowers with little or no home equity renance into
more affordable mortgages
BACKGROUND AND PURPOSE
The purpose of the Relief Renance
SM
/Home
Affordable Renance Program (HARP) is to help bor-
rowers with little or no equity in their homes renance
into more affordable mortgages. HARP is for borrow-
ers whose loans are owned by Freddie Mac or Fannie
Mae. HARP targets borrowers with high loan-to-value
(LTV) ratios and who have limited delinquencies over
the 12 months before renancing. Changes possible
through HARP include lower interest rates, shorter loan
terms, or changing from an adjustable to a xed-rate
mortgage. HARP guidelines have been simplied and
relaxed over the life of the program, meaning that even
people who were previously turned down may now be
eligible for HARP renancing. For example, in 2011,
the LTV ceiling was removed for xed-rate mortgages,
property appraisal requirements were waived in certain
circumstances, certain risk fees for borrowers selecting
shorter amortization terms were eliminated, and cer-
tain representations and warranties were waived. In
2013, the eligibility date was changed from the date
the loan was acquired by Freddie Mac or Fannie Mae
to the date on the note, increasing the pool of eligi-
ble borrowers.
HARP was introduced in March 2009 to address the
decline in home values that occurred over the pre-
vious few years. HARP must be renewed annually
by Congress.
BORROWER CRITERIA
Original loan requirements: The loan must be owned
or guaranteed by Freddie Mac (e.g., no Fannie Mae,
VA, FHA, or USDA loans).
PROGRAM NAME
Relief Renance
SM
/Home Affordable Renance Program
AGENCY
Freddie Mac
EXPIRATION DATE
December 31, 2018. Congress must renew annually.
APPLICATIONS
No program-specic application is required. For information on becoming a Freddie Mac seller,
see http://www.freddiemac.com/singlefamily/doingbusiness/
WEB LINK
http://www.harp.gov
CONTACT
INFORMATION
[email protected] (ask for a call back in your email)
APPLICATION PERIOD
Continuous
GEOGRAPHIC SCOPE
National. HARP tracks the number of eligible loans by state and MSA. Information is
available quarterly at http://www.harp.gov/Default.aspx?Page=363
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Age of loan: The original loan must have been originated on or before
May 31, 2009.
Loan-to-value limits: The original loan must be above 80 percent LTV,
with no upper limit on LTV for xed-rate mortgages.
Delinquency: No late mortgage payments in the last six months, no
more than one 30-day late payment in the last 12 months.
Income limits: This program has no income limits.
Credit: The minimum credit score for a one- to four-unit primary resi-
dence is 660.
Occupancy and ownership of other properties and property type:
HARP renances may be performed on primary residences, investment
properties, and second homes (single units only).
Special populations: No benet is conferred by being a member of a
special population.
Property type: Single-family homes of one- to four-units, manufactured
homes, planned unit developments, and condominiums are allowed.
Units in cooperatives are permitted if allowed by the cooperative’s
sales documents.
LOAN CRITERIA
Loan limits: FHFA publishes Freddie Mac’s conforming loan limits annu-
ally. See Resources for a link to the current limits. Certain high-cost areas
are also taken into consideration.
Original loan requirements: The loan must be owned or guaranteed by
Freddie Mac.
Adjustable-rate mortgages: 5/1, 7/1 and 10/1 ARMs are allowed but
must result in a principal and interest reduction if renancing from a
xed-rate mortgage. LTV is capped at 105 percent.
Post-settlement delivery fee: For primary residences with LTV ratios
greater than 80 percent, Freddie Mac caps the delivery fee at zero per-
cent for loans with terms less than 20 years, and 0.75 percent for loans
with terms of more than 20 years.
Mortgage insurance: For an LTV ratio greater than 80 percent:
• If the mortgage being renanced has mortgage insurance coverage,
then the same mortgage insurance coverage percentage must be
maintained or the standard coverage applies.
• If the mortgage being renanced does not have mortgage insur-
ance, then no mortgage insurance coverage is required.
POTENTIAL BENEFITS
Lenders do not need to perform
new underwriting or review new
appraisals in most cases.
Freddie Mac has reduced the
fees it charges lenders that help
borrowers refinance into less
risky, shorter-term loans.
POTENTIAL CHALLENGES
This program has several bar
riers to being a source of new
business. Eligible properties
are concentrated in a few mar
kets. Also, if borrowers are
going through a new lender, the
lender will need to perform a
new appraisal and underwriting,
eliminating the processing effi
ciencies offered by the program.
If payments are going up by more
than 20 percent, requalification is
necessary, meaning more work
for lenders assisting borrow
ers who are making substantial
changes to their mortgages.
FDIC | Affordable Mortgage Lending Guide | 156
Fees: For xed-rate loans with LTV ratios greater than
80 percent, Freddie Mac’s fee is zero percent on loans
with terms less than 20 years, with a 0.75 percent cap
on loans with terms of more than 20 years.
Underwriting: Loans must be fully underwritten using
Loan Product Advisor® or manual underwriting.
Appraisal: Either Home Value Explorer® (HVE) or a
full new appraisal can be used to determine collateral
value. See Guide Section B24.3(g) for detailed require-
ments on the use of HVE.
Potential Benets
• Lenders do not need to perform new underwriting
or review new appraisals in most cases.
• Freddie Mac has reduced the fees it charges lend-
ers that help borrowers renance into less risky,
shorter-term loans.
• Lenders now need less paperwork for income
verication, and have the option of qualifying a
borrower by documenting that the borrower has at
least 12 months of mortgage payments in reserve.
• If lenders underwrite a HARP loan they did not ini-
tially underwrite, the reps and warrants on the loan
will sunset in 12 months rather than 36 for other
Freddie Mac products.
Potential Challenges
• This program has several barriers to being a source
of new business. Eligible properties are concen-
trated in a few markets. Also, if borrowers are going
through a new lender, the lender will need to per-
form a new appraisal and underwriting, eliminating
the processing efciencies offered by the program.
• If payments are going up by more than 20 percent,
requalication is necessary, meaning more work
for lenders assisting borrowers who are making
substantial changes to their mortgages.
• Congress must annually extend the program.
SIMILAR PROGRAMS
• Fannie Mae Re Plus™/Home Affordable Renance
Program (HARP)
• FHA Streamline Renance
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RESOURCES
Direct access to the following web links can be found at https://www.
fdic.gov/mortgagelending.
Delivery fees
http://www.freddiemac.com/singlefamily/pdf/ex19.pdf
Find out if Freddie owns the loan
https://ww3.freddiemac.com/loanlookup/
Program guidelines: See Chapter 24.3 of Freddie Mac’s Seller/Servicer Guide FAQs.
http://www.freddiemac.com/singlefamily/factsheets/sell/relief_re_faqs.html
About Loan Product Advisor®
http://www.freddiemac.com/loanadvisorsuite/loanproductadvisor/
About Home Value Explorer®
http://www.freddiemac.com/hve/hve.html
FHFA Conforming loan limits
http://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx
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