In March of 2009 the federal government launched the Home Affordable Refinance Program (HARP). The purpose of the Program, or HARP, as it’s called, is to allow homeowners who owe more than their home is worth to refinance into today’s lower interest rates. The HARP refinance is targeted exclusively to homeowners whose mortgages are backed by Fannie Mae or Freddie Mac. VA and FHA loans are not eligible for HARP refinancing.
If a homeowner paid 20% down at the time their mortgage was funded and is not paying mortgage insurance, no mortgage insurance will be required when obtaining a HARP loan. If a homeowner paid 10% down and refinances into a HARP loan, they’ll continue to pay mortgage insurance, but at the rate they’d pay if there was still 10% equity in the home.
To further understand the program, assume a borrower owns a home that’s currently worth $300,000, but owes $400,000 and has a 6% interest rate. Under normal underwriting guidelines the borrower would not be able to refinance because lenders are unwilling to loan more than a home is worth. However, under HARP guidelines the borrower could refinance the $400,000 mortgage under today’s lower interest rates (as of 5/15/15 and the Fannie Mae Conventional interest rate is about 3.5% at par). Under HARP the borrower would clearly enjoy a much more attractive interest rate.

Set forth below is a summary of the HARP eligibility criteria (please note that this list is not exhaustive):