Still Ineligible For HARP? Your State May Be Able To Help

Gina Pogol
The Mortgage Reports contributor

If Your Loan Isn’t Backed By Fannie Or Freddie, You’re Still Ineligible For HARP

All the happy news about the drop in the US foreclosure rate, the increase in property values nationwide, and the loosening up of HARP guidelines brings little joy to those who still can’t refinance. Underwater homeowners ineligible for HARP still can’t lower their costs by refinancing.

However, some state programs offer new relief to these homeowners.

Verify your new rate (Aug 24th, 2019)

Ineligible for HARP Doesn’t Mean You Have No Options

Most states supply some sort of aid for underwater homeowners who are ineligible for HARP. The Hardest Hit program, a federal remedy that was created in 2010, funds most of these plans.

Since 2010, many states have updated their programs to include more homeowners or offer more help.

New Rules: Check Your State

In Illinois, where nearly 20 percent of homes are still underwater, the I-Refi program helps borrowers by providing up to $50,000 to reduce their mortgage balances. Then, homeowners can refinance with mainstream lenders.

Underwater borrowers must owe at least ten percent more than their property value. The underwater home must be their primary residence. Homeowners must have made their last 12 mortgage payments on time. Their mortgage must also be current.

Income limits and home price maximums apply. This program is for those who are struggling, not heavy earners who made bad investments. The program’s limits and rules depend on local home prices and median incomes.

There are also credit score minimums, which range from 640 to 680, and participants must complete approved homeowner education programs.

Verify your new rate (Aug 24th, 2019)

States Receiving Hardest Hit Funds

The Department of the Treasury released a report in December 2016 detailing the amounts states received and how they are being used to help troubled homeowners, including those ineligible for HARP. Here’s a quick run-down:

State Program Details
Provides up to $30,000 to reduce the principal balance, pay delinquent escrow or past due payments, or recast the loan.
Eligible homeowners can receive up to $100,000 in principal reduction if at least 120 percent underwater.
Eligible borrowers (income restriction apply) can qualify for up to $100,000 in principal reduction.
Offers up to $50,000 in principal reduction to eligible homeowners. Must owe at least 115% more than their home value.
Does not offer a principal reduction program for underwater borrowers. However, those who experience hardship due to a permanent reduction of income may qualify for up to $30,000 to reduce their mortgage balance.
Illinois Provides up to $50,000 to eligible homeowners who are current on their mortgage payments.
Indiana offers mortgage payment assistance to eligible homeowners, but none of these programs include principal reduction or refinance.
Kentucky offers assistance to eligible homeowners to bring delinquent loans current. The program does not address underwater homeowners or principal reductions.
Michigan Michigan offers up to $10,000 in principal reduction to qualified underwater borrowers, and requires a matching reduction from the lender — for a total maximum of $20,000.
Mississippi  Mississippi offers up to $50,000 to reinstate a delinquent mortgage, but does not address principal reduction or underwater home loans.
Nevada Nevada’s Principal Reduction Program (PRP) offers eligible homeowners with negative equity up to $100,000 of assistance.
New Jersey New Jersey’s program doesn’t address negative equity or principal reduction. It supplies up to $50,000 in aid to homeowners in danger of foreclosure through no fault of their own.
North Carolina
North Carolina does not offer principal reduction or address underwater properties. Its program provides interest-free loans of up to $36,000 to eligible homeowners in danger of foreclosure.
Ohio’s solution to falling property values is unique in that it provides funds to demolish blighted properties and provide landscaping to improve neighborhood property values.
Oregon’s approach is a little different. Its Loan Refinancing Assistance Pilot Project (LRAPP) refinances eligible underwater homeowners’ underwater mortgages into a new mortgage based on their home’s current value.
Rhode Island
Rhode Island doesn’t offer principal reduction or address underwater mortgages at all. It does offer help with mortgage payments to those with eligible hardships.
South Carolina
South Carolina doesn’t reference principal reduction or underwater mortgages. However, it does offer up to $36,000 to “help homeowners qualify for an acceptable modification or recast of their first mortgage.” This might take the form of a principal reduction.
Tennessee’s Keep My Home Program has been terminated.
Washington DC
DC’s Program provides up to $32,385 in aid to help delinquent homeowners bring their mortgages current. Underwater homes or principal reductions are not included.

There are several reasons to hang in there if you’re ineligible for HARP. First, programs are being updated all the time. Eligibility requirements are changing. New loan products are coming on the market all the time. Don’t Give Up.

For example, eligible homebuyers today can find Fannie Mae and Freddie Mac combinations of first and second mortgages that exceed the property value and cover all the closing costs.

That would have been unthinkable not long ago.

Most importantly, property values are recovering. In some places, this is happening more quickly than others, and it can feel frustrating if your area is slower to bounce back.

What Are Today’s Mortgage Rates?

Current mortgage rates for the HARP and other programs have held fairly steady this week — down slightly on Monday, bouncing back on Tuesday. It’s important to realize that mortgage rates move all the time, like stock prices, mutual funds, bonds and commodities.

Finding your best deal depends on being the strongest applicant you can be and shopping aggressively for your loan. Request several mortgage quotes from competing lenders to know that you’re getting a good offer.

Verify your new rate (Aug 24th, 2019)