What is HARP?


Help is on the way! Go fishing.

Normally, it is impossible to get a loan that exceeds the value of the house.   The obvious reason: that the house can’t cover the loan in the event of a default by the homeowner.  Alas, banks or other lenders typically won’t take that gamble, and therefore require an 80% loan to value.

The problem since 2006, is that the U.S. economy has been feeling reverberations of the  financial crisis that ignited during the Bush administration.  With the economy weak, and the banks in trouble, the housing boom took a severe turn downward,  dropping the value of homes 30% across the country – 50% in certain markets.  Withe HARP program helps underwater homeowners refinance their homes – to take advantage of lower rates and benefit from lower monthly payments.

The HARP Solution.  The Home Affordable Refinance Program, abbreviated as HARP, is a United States program developed by the Federal Housing Finance Agency to help underwater and near-underwater homeowners refinance their mortgages.  The program is designed to reduce stress on homeowners following the correction of U.S. housing prices in recent years. HARP focuses on homeowners who are current on their monthly mortgage payments but are unable to refinance because the value of their home has declined due to dropping home prices in the wake of the U.S. housing market correction.