HARP 3.0 Bill Gets Renewed Push In Congress

Dan Green
The Mortgage Reports contributor

HARP 3 : The Menendez-Boxer Bill / Responsible Homeowners Act Of 2013

A third HARP 3.0-like mortgage bill has been introduced in Congress.

Following the failed Responsible Homeowner Refinancing Act of 2012, Senators Robert Menendez and Barbara Boxer have re-drafted their landmark refinance bill meant to help underwater U.S. homeowners get access to today’s low mortgage rates.

The Responsible Homeowner Refinancing Act of 2013 proposes to eliminate certain closing costs, including the cost of home appraisal, and to make it simpler for homeowners to “change servicers” via the Home Affordable Refinance Program (HARP).

Click to get today's HARP mortgage rates (May 31st, 2020).

The Next HARP : No Job Verification, No Income Verification?

The Home Affordable Refinance Program (HARP) was first launched in February 2009. It gave homeowners whose mortgages were securitized by Fannie Mae and Freddie Mac, and whose homes had lost value since the housing market peak, the ability to refinance into new, lower mortgage rates without incurring new private mortgage insurance (PMI) costs.

Via HARP, a homeowner who had put 20% down on a home, then subsequently lost that equity, could refinance without requiring PMI.

In 2011, HARP coverage was expanded into the program we now call HARP 2.0.

HARP 2.0 eliminated the original HARP’s 125% maximum LTV limitation, which allowed for unlimited loan-to-value, helping homeowners get access to HARP in hard-hit states such as Florida and Nevada, where home values had dropped by fifty percent or more.

To further help such underwater homeowners, the new Home Affordable Refinance Program added loan fee caps for homeowners whose mortgages exceeded a certain loan-to-value; and for homeowners refinancing into a 15-year fixed rate loan.

In roughly 3 years, the original HARP reached one million U.S. households. It took HARP 2.0 just eight months to do the same.

In an effort to reach even more U.S. homeowners, the Responsible Homeowner Refinancing Act of 2013 attempts to go further.

Click to get today's HARP mortgage rates (May 31st, 2020).

Key Upgrades : Responsible Homeowner Refinancing Act of 2013

The Menendez-Boxer bill aims to put HARP in the hands of more U.S. homeowners. To that end, the program aims to loosen around the edges with respect to income, employment, appraisal, and closing costs.

First, the Responsible Homeowner Refinancing Act proposes to reduce upfront loan fees for all HARP borrowers.

Under the current system, borrowers with ultra-high LTVs may be subject to fewer upfront closing costs as compared to borrowers with loan-to-values between eighty and one-hunded-five percent.  This is strange in that loans over 125% typically represent a higher risk than an 85% LTV loan.

The new HARP bill proposes to level out fees for all eligible homeowners.

Second, the Responsible Homeowner Refinancing Act would formally remove income and employment verifications from the HARP approval process.

Currently, HARP boasts lax requirements on both issues. The new HARP would codify this. Regardless of whether you’re employed, unemployed; earning verifiable income, newly commissioned, or without wages, your HARP approval will be unaffected.

HARP already requires that refinancing homeowners have good payment history. The Responsible Homeowner Refinancing Act suggests that this trumps the need to verify income and employment.

This is a similar philosophy to the FHA’s policy on the FHA Streamline Refinance; and the VA’s policy for its Interest Rate Reduction Refinance Loan (IRRRL).

And, third, the Menendez-Boxer bill would require Fannie Mae and Freddie Mac to create alternate home appraisal methods; ones which don’t cost as much as a “full appraisal” requiring a home visit.

Currently, Fannie Mae and Freddie Mac allow for automated appraisals which show values within a certain “expected range”.

Other HARP Guidelines Expected In Menendez-Boxer Bill

The Menendez-Boxer Bill makes few other changes to the existing HARP 2.0 program guidelines. Save for a program extension date, qualification looks mostly identical.

The Responsible Homeowner Refinancing Act of 2013 would be available to homeowners with :

  1. A mortgage currently owned or guaranteed by Fannie Mae or Freddie Mac
  2. A mortgage securitized by Fannie Mae or Freddie Mac on or before May 31, 2009
  3. A mortgage which has not been previously refinanced via HARP, except for Fannie Mae loans refinanced under HARP between March and May 2009
  4. A mortgage with a loan-to-value ratio of 80% or greater
  5. A mortgage which is current and with perfect payment history dating back 6 months

That said, because of the recent Home Affordable Refinance Program extension to December 31, 2015, there’s talk that a HARP 3.0-like piece of legislation would move forward the program’s start date from May 31, 2009 to May 31, 2010, or something similar. This would open HARP 3.0 to U.S. homeowners whose mortgages were originated between June 1, 2009 and May 31, 2010. 

There’s also talk about allowing (or specifically disallowing) the “Re-HARP” — a refinance of a mortgage which has already used the HARP program once. 

Check Your Personal HARP Eligibility

For today’s HARP homeowners, the Responsible Homeowner Refinancing Act of 2013 would make the refinance process faster, smoother, and less costly. And with the typical HARP homeowner lowering mortgage rates 1.8 percentage points, the savings would be large.

Check your HARP eligibility, and today’s program rates. It’s free and there’s no social security number required.

Click to get today's HARP mortgage rates (May 31st, 2020).