Sweet strains of the HARP

Sweet strains of the HARP

tartan_kiltsOn July 31, “The Hot Rod,” Rowdy Roddy Piper, died peacefully in his sleep. The Hot Rod was a professional wrestler and a Hollywood film actor. I consider him the greatest TV wrestling villain in the history of the sport. Piper was a despicable character that blatantly cheated at all costs to win. He was fearless and truly despised. He had a knack for humiliating his enemies. But somehow, millions of fans still loved Roddy. He set the stage for unpredictable, memorable moments and one-liners like, “Just when they think they got the answers, I change the questions.”

During the mid-’80s, Piper hosted an interview segment called “Piper’s Pit.” Millions of wrestling fans tuned in. Piper entered the arena dressed in a kilt and a Superman T-shirt along with an ensemble of bagpipers, a bass drummer and drum snares. The haunting sounds of the pipes whipped thousands of fans into frenzy. Only the bagpipes could put people in to this state of rabid alertness; let’s face it, a harp would not have the same impact. Speaking of HARP…

HARP, the Home Affordable Refinance Program, was created in 2009. It was set up to help homeowners who were “upside down” on their mortgages the ability to refinance their homes and take advantage of lower interest rates. HARP is a federal program, set up by the Federal Housing Finance Agency. Only loans owned or guaranteed by one of the two federal secondary mortgage corporations, Fannie Mae or Freddie Mac, qualify for HARP.

The deadline for HARP refinances is Dec. 31, 2016. And, based on recent comments by Melvin Watt, director of the Federal Housing Finance Agency, HARP will be counted out of the ring after that date.

Qualifications for the original HARP were very strict, and very few “underwater” homeowners were able to take advantage of the original HARP. However, an evolved HARP, dubbed HARP 2.0, quietly gained popularity.

Under HARP 2.0, qualification standards were loosened dramatically compared to the original HARP. For example, you could only be underwater on a mortgage by 5 percent. For a mortgage of $300,000, the value of your home could not be less than $285,000 to refi under the old HARP.

Today, under HARP 2.0, the amount that a homeowner can be upside down on their mortgage has been greatly expanded. Depending on the homeowner’s overall financial situation, mortgage type and credit score, the homeowner could be as much as 100 percent upside down. In addition to primary residences, many other types of properties qualify for a HARP 2.0 refinance, such as second homes and some multi-family investment properties.

Under HARP 2.0, your loan still has to have been owned by Fannie Mae or Freddie Mac; you must be current on your loan payments, with no late payments of 30 days or more within the last six months and only one late payment in the previous year.

While the HARP program has been modified to allow more borrowers to qualify, there are still several reasons why someone wouldn’t qualify. For example, some borrowers will not qualify due to impaired credit or too many late payments on their existing mortgage. Lenders may also impose their own guidelines, called “overlays” such as different loan to value (LTV) rules.

Assuming you haven’t already financed under HARP (homeowners can only utilize the HARP program once), now could be the time to consider reapplying for such a refinance. The program has been extended several times, however, the final deadline for HARP refinances is Dec. 31, 2016.

Great villains create great heroes, and Roddy Piper elevated many heroes in the sport of professional wrestling, a sport watched by millions. Recently, more than 10 million people tuned in to watch another popular spectator sport, the Republican presidential debate. Presidential politics, like pro wrestling, is a well-orchestrated theatre with heroes and villains. Early on, Trump is clearly emerging as one of the villains, but like Roddy Piper, he’s a fan to many. Only the promoters know who the main stage hero will be in this story line. Tune in, it’s going to get interesting!

R.I.P. Hot Rod!

This article originally appeared in the Old Colony Memorial on August 29, 2015.

Bill Harris is a certified financial planner practitioner. He is a member of the board of directors for the Financial Planning Association of Massachusetts and an Ed Slott Elite IRA Advisor. He is a co-founder and principal of WH Cornerstone Investments in Duxbury and Kingston. He can be reached at www.whcornerstone.com or 888-797-9009.

Helping widows rebuild their lives after the loss of a spouse. Love practicing yoga & golf. A connector. Strive to live by the Girl Scout Promise & Law.