As of December 31, 2018, the Home Affordable Refinance Program (HARP) is being eliminated by Fannie Mae and Freddie Mac. This program was originally established to help homeowners who were struggling after the housing bubble burst in 2008. Since the economy (and especially the housing and lending markets) have recovered significantly in recent years, the HARP refinancing program is outdated. That’s why it is being phased out at the end of this year.
The Relief Refinance Program
The good news is that Fannie Mae and Freddie Mac are rolling out a replacement refinancing program that will take effect on November 1, 2018. It is called Relief Refinance Program (RRP). It is essentially a new and improved version of HARP, and lending service providers like Quicken Loans are immediately making this refinancing program available to their loan service partners. Being that Transparent Mortgage is an exclusive Quicken Loans partner serving San Diego County and other parts of Southern California, we are excited to start introducing our eligible clients to this program.
Some advantages of the Relief Refinance Program include:
- Allows borrowers to refinance to better loan terms
- No cap on loan-to-value (LTV) for fixed rate loans (ARM capped at 105% LTV)
- Private mortgage insurance (PMI) transfer
- Minimal document requirements
Like HARP, the Relief Refinance Program is designed specifically to help homeowners in tougher financial situations. It allows borrowers to refinance their mortgage loans and get better terms that they can afford. As with any government-backed loan relief program, there are some strict guidelines and minimum requirements that borrowers will need to meet in order to be eligible for the Relief Refinance Program.
1. Fannie Mae to Fannie Mae or Freddie Mac to Freddie Mac
First, the refinance must be from a Fannie Mae backed loan (FNMA—Federal National Mortgage Association) to another Fannie Mae backed loan. Or similarly, it needs to be from a Freddie Mac backed loan (FHLMC—Federal Home Loan Mortgage Corporation) to another Freddie Mac backed loan. In other words, the new loan must have the same government backing as the original loan.
2. Previous Loan Cannot Be a HARP Refinance
If you have already refinanced with a HARP loan previously, you will not be eligible for another refinance through the Relief Refinance Program. That does not mean you aren’t in position for a different kind of refinance (check with your mortgage advisor), but you just won’t be able to redo the loan again through the RRP.
3. Only Loans Closed On or After October 1, 2017
In order to be eligible for the Relief Refinance Program, your original loan must have been closed and funded on or after October 1, 2017. Any loans prior to this date will not be eligible for RRP refinancing.
4. At Least 15 Months of Seasoning
Another point of eligibility is what we call the “seasoning” of the loan, which is essentially how long you’ve had the loan up until the time you decide to refinance. Relief Refinance Program eligibility requires at least 15 months of seasoning, which means the original loan must be at least 15 months old before you can close your RRP refinance loan.
5. Must Be a Clear Borrower Benefit
The point of the Relief Refinance Program is to help homeowners. Therefore, there must be a distinct borrower benefit with the refinanced loan. Examples include going from an adjustable-rate mortgage (ARM) to a fixed-rate loan, reducing the total term/length of the loan and/or lower interest rate.
These are the primary eligibility requirements, though there are a few other details that you will need to know when you talk with your mortgage advisor. The team at Transparent Mortgage is here to help walk you through the Relief Refinance Program. We can review your application and financial situation and determine if you are eligible for one of these great home refinance loans through Quicken Loans. If not, we will work with you to find the best possible solutions to your mortgage needs.
Call Transparent Mortgage today at (619) 929-0199.