Home Affordable Refinance Program (HARP): The Role of the Loan Servicer

The Home Affordable Refinance Program (HARP) falls into the family of initiatives aiming to relieve homeowners who can no longer afford their mortgages as a result of the 2007 market collapse. These programs are aimed at those individuals who were most impacted by the recession by predatory lenders, job loss or emergency situations. The HARP program in particular helps homeowners refinance their loans to low, fixed rates currently available on the market.

Who Qualifies for HARP?

To qualify for HARP, you must meet the eligibility requirements set out by the family of programs called the Home Affordable Modification Program (HAMP). HAMP qualifications are as follows:

  • You use the home as your primary residence.
  • You took your loan prior to January 1, 2009.
  • You do not owe more than $729,750 on your outstanding principal.
  • The loan payments are greater than 31 percent of your income.
  • You had a qualifying event that precludes you from making payments, rendering default imminent without adjustment to the mortgage.

Qualifying events include a wide range of issues such as rapidly adjusting mortgage rates, job loss, injury, hospital bills or even divorce. Any event that substantially reduces your ability to pay for an extended period is a qualifying event.

What Is the Role of the Loan Servicer?

The "loan servicer" is your mortgage lender. In order for you to be eligible for the HARP loan program, your servicer will have to be on board. The servicer qualifies for the HARP program by agreeing to follow certain government procedures. These procedures allow the Department of Housing and Urban Development (HUD) to share in the risk of the loan, making it cheaper for the current servicer to finance than before HUD stepped in. In exchange for this help, the servicer agrees to lower interest rates and terms that are more favorable to the borrower.

Which Servicers Participate?

Hundreds of lenders nationwide have signed up to participate in HARP. For lenders, this provides relief from shouldering the burden of risky loans. All loans provided through Fannie Mae or Freddie Mac programs qualify. You can check to see if your lender is participating by visiting your local or regional HUD office. The "Making Home Affordable" website also has a list of loan servicers updated regularly. 

What If My Servicer Does Not Participate?

First, you should check to see if your servicer is a participant listed on the Making Home Affordable servicer list. Your loan agent may be unaware the lender is participating, or your loan servicer may be attempting to deny you benefits by being less than honest about its participation in the plan. Most national lenders, including major banks and finance institutions, are participating. If your lender is not a participant, you can still seek to privately refinance the loan. Ask the servicer about options for direct refinancing. With the high amount of mortgage default currently occurring, most lenders will be open to options to help you prevent default through refinancing methods.