The mortgage crisis may not make the nightly news anymore, but that doesn’t mean it's completely over. There are still plenty of homeowners who have trouble keeping up with their mortgage payments. In fact, 3.5 million homeowners across the country were seriously underwater in the third quarter of 2019. That's 6.5% of the total number of homes in the U.S. with a mortgage. Being underwater means the mortgage holder owes more than 25% of the market value of the home. These owners can’t sell their homes because the price they would likely receive wouldn’t satisfy the loan amount. But there was some respite for people who may find themselves in this situation.

Since the mortgage crisis is no longer top-of-mind, underwater homeowners were able to apply for assistance through the Home Affordable Refinance Program—better known as HARP. But what was it? Read on to find out more about the program.

Key Takeaways

  • HARP was a government program designed to help underwater homeowners—with homes worth less than the outstanding mortgage balance—refinance their loans.
  • The program expired on Dec. 31, 2018.
  • HARP allowed mortgagors to either lower their monthly mortgage payments or to pay down the loan faster by lowering their interest rates, and allowed them to build more equity.
  • After it expired, Fannie Mae and Freddie Mac rolled out high LTV programs for distressed homeowners.

What Was HARP?

HARP was a government program that was designed to help underwater homeowners—specifically those whose homes are worth less than the outstanding mortgage balance—refinance their loans. It was set up by the Federal Housing Finance Agency (FHFA) in March 2009 in response to the financial crisis. Because of the effects of the real estate market crash, millions of homeowners found themselves stuck underwater on their mortgage loans.

The program promised to save homeowners an average of $179 each month by paying less over the life of the loan. It allowed mortgagors to either lower their monthly mortgage payments or to pay down the loan faster by lowering their interest rates. This built more equity in a shorter period of time.

Qualification criteria was also lowered under the program. Most homeowners didn't need an expensive appraisal or underwriting. Another benefit: Much less paperwork for income verification. 

The program was originally set to expire in December 2016 but was extended. It finally expired on Dec. 31, 2018. It helped more than 3.4 million people refinance to get lower rates on their mortgages since the program first began, making their home loans more affordable.

HARP expired on Dec. 31, 2018.


More than 3.2 million homeowners took advantage of the benefits of HARP. But there was a set of criteria homeowners must have met before being approved for the program.

  • The loan must have been owned or guaranteed by Freddie Mac or Fannie Mae. Although Fannie and Freddie don’t originate loans, they do guarantee them. Anyone whose loans didn't go through either of these companies could still qualify by verifying whether their guarantor programs was involved with their loan.
  • Mortgage must have been advanced on or before May 31, 2009. Anyone whose mortgage was taken out after that date didn't qualify for HARP.
  • Another consideration for qualification was the homeowner's current loan-to-value ratio (LTV). When the program began, homeowners weren't able to refinance if their LTVs were above 125%. This changed in the later part of 2009, taking the limit off the LTV. However, a homeowner's LTV must be greater than 80%. In most cases, having a high loan-to-value ratio isn’t a good thing, but when it came to HARP, the higher the better.
  • Loans must have been current. A homeowner could not have delinquent payments of 30 days or more. There was also a limit —only one late payment in the preceding 12 months.

The program didn't actually lend money. Instead, it worked with lenders to offer HARP loans. Homeowners were able to check with their current lender to see if it offered HARP loans. Another option they had was to go to HARP website and see if the lender participated in the program.

Life After HARP

As HARP began to wind down, both Fannie Mae and Freddie Mac rolled out high LTV programs for distressed homeowners.

Fannie Mae's High LTV Refinance Option

Homeowners with existing Fannie Mae mortgages may qualify for the High LTV Refinance Option. There is no maximum LTV for anyone with a fixed-rate mortgage, while adjustable-rate mortgages qualify for a maximum of 105% LTV. The refinance option must result in one or more of the following:

  • Lower principal and interest payment
  • Interest rate drop
  • Shorter amortization
  • Change in a stable mortgage product

Mortgage payments must be up to date with no late payments in the last six months. The program only allows one late payment within the last 12 month-period.

Freddie Mac's Enhanced Relief Refinance

This program, offered by Freddie Mac is similar to the one offered by Fannie Mae. The LTV ratio for the new mortgage must be more than the maximum LTV limit for a standard no cash-out refinance mortgage from Freddie Mac.

The Bottom Line

Before it expired, HARP helped millions of distressed homeowners who were underwater refinance their mortgage. While it didn't decrease the amount of money they owed, it did help homeowners reduce the interest rate and lower their payments. Although the program doesn't exist anymore, homeowners can still take advantage of other programs such as the high LTV options offered by Fannie Mae and Freddie Mac.