This program is aimed at borrowers who have not missed a mortgage payment.
It is different from earlier government programs aimed at those who were late on their payments. Those plans offered mortgage modification so people could have lower monthly payments.
The Washington Post reports HARP has helped about 60,000 people so far, not as many as it was intended to help. That aim is for five million.
The target audience? Borrowers who could not qualify for traditional refinancing because they had less than 20 percent equity in their home, something that has been exacerbated by plummeting housing prices throughout most of the country.
About one-third of home mortgages are under water (owe more than the home is worth).
HARP got off to a slow start because of its complicated paperwork requirements and a lack of clarity on how to determine the worth of a home.
The program is limited to borrowers with loans backed by Fannie Mae and Freddie Mac, government-controlled financing companies. Initially those homeowners were eligible to refinance as long as their mortgage did not exceed 105 percent of the current value of their property.
For example, if the value of a property is $200,000 but the owner owes $210,000, he or she could qualify. But last month, the government announced it would expand the program to borrowers’ whose mortgage do not exceed 125 percent of the current value. So the mortgage on that house could be as much as $250,000 and still qualify for refinancing.
The refinancing program is separate from a high-profile government loan modification plan, which targets distressed borrowers at risk of losing their home and attempts to lower their payments to affordable levels. The refinancing program is aimed at borrowers who have not missed any payments but who would benefit from a cheaper mortgage. The effort is seen as a way to potentially generate more spending cash for financially strapped consumers.
Home prices have leveled off recently and experts say the worst of the declines in home values are over.