The HARP loan program, (Home Affordable Refinance Program), has received quite a bit of press recently, but is largely considered to be a failure, at least at this point.
The HARP program was designed to help some 4 to 5 million homeowners refinance their mortgages in order to reduce their payments and stay in their homes. The guidelines of the HARP program require, among other things, the homeowner to have a loan owned by Freddie Mac or Fannie Mae and the home to have a LTV (Loan-to-Value) ratio of no more than 105%.
Although the program was unveiled to great fanfare, the results have been less than stellar. The main sticking point here being that lenders are not required to make the loan even if the homeowner qualifies under the terms of HARP. That is to say, despite the appropriate and complete qualifications, the lender can simply deny the loan.
The Obama administration has recently urged lenders to free up credit and make these loans, but the results are still to be seen.
As home prices continue to fall an increasing number of homeowners are finding the LTV ratio on their home reaching the 125% mark or worse. Lenders are simply too skittish at this point to make these loans and are finding little incentive to begin any time soon.