HARP and FMERR replacement: the Fannie Mae “High LTV Option” (HIRO) for underwater refinance

Gina Pogol
The Mortgage Reports contributor

HARP replacement program FMERR is done. Here are your options now (updated December, 2019)

The Federal Housing Finance Agency (FHFA) ended its Home Affordable Refinance Program (HARP) on December 31, 2018.

HARP was launched in 2009 as a way for homeowners who are current on the existing mortgage loan but have little or no equity, to take advantage of low mortgage rates.

As of September 2019, Freddie Mac’s HARP replacement program (FMERR) is also expired.

But low-equity or underwater homeowners could still be eligible to refinance using Fannie Mae’s HARP replacement program, called the HIRO program, short for “High LTV Refinance Option.”

Check your eligibility for the new HARP replacement program today.

Verify your eligibility for HARP replacement programs here. (Jan 15th, 2021)

In this article:

HARP and FMERR fast facts

  • The Home Affordable Refinance Program (HARP) expired on December 31, 2018
  • Freddie Mac’s HARP replacement program, FMERR, also expired on September 30, 2019
  • The Fannie Mae High-LTV Refinance Option (HIRO), still in force, is a good HARP and FMERR replacement program
  • Those who missed HARP or FMERR may be eligible to refinance under the new replacement program from Fannie Mae

HARP replacement applications accepted November 1, 2018

Two new loan programs replaced HARP when it expired. They were the Fannie Mae “High LTV Refinance Option” (HIRO Loan) and the “Freddie Mac Enhanced Relief Refinance” or “FMERR”. Both HARP replacement programs kicked off on November 1, 2018. 

The FMERR program has since ended. It expired on September 30, 2019. But the Fannie Mae High-LTV Refinance program is still in effect.

With Fannie Mae’s HARP replacement it’s possible for many homeowners with little or no equity to refinance into a lower interest rate.

  • Only an existing Fannie Mae mortgage may be refinanced to a new Fannie Mae mortgage
  • You can refinance with the Fannie Mae high-LTV program more than once. However, you cannot refinance a HARP mortgage to this HARP replacement program
  • The cutoff date is different from the original HARP, which only allowed loans originated before June 1, 2009. The replacement program only lets you refinance mortgages originated on or after October 1, 2017
  • Unfortunately, homeowners with a loan that started before October 2017 won’t be eligible and must refinance with a standard program

The new loan has some benefits.

Benefits of the new HARP replacement program

According to Fannie Mae’s announcement dated December 19, 2018:

  • Mortgage insurance (MI), if you have it, must be transferred to the new loan. But if you don’t currently have MI, you won’t need it for the new loan.
  • Simplified documentation requirements mean you may not have to prove income, assets or liability information. There is also no minimum credit score or maximum debt-to-income ratio
  • Both electronic and manual underwriting options are available to the same or a new servicer (meaning you can shop for the best rate on your high-LTV mortgage).

These loans should be much faster and easier to process than standard refinances.

HARP and FMERR replacement eligibility

Only existing mortgages that can be improved with a refinance are eligible. The new mortgage must offer at least one of these benefits:

  • Interest rate reduction
  • Lower monthly principal and interest payment
  • Shorter loan term
  • Replacement of an adjustable loan with a fixed-rate mortgage

In addition, homeowners:

  • Must have made at least 12 on-time payments
  • Must have had no payments 30 or more days late in the previous six months
  • No more than one 30-day late payment in the past year

Loans with 30-day late payments (or worse) in the last year are ineligible.

Loan-to-Value (LTV) guidelines for Fannie Mae’s HARP replacement program 

Fannie Mae guidelines say that borrowers must owe more than 97 percent of their home’s current value for primary, single-family residences.

Borrowers can also refinance multi-unit homes, second homes and investment properties under the program, with lower minimum loan-to-value requirements:

Property Type Number of units Loan-to-value must exceed
Primary residence 1 97.01%
Primary residence 2 85.01%
Primary residence 3-4 75.01%
Second home 1 90.01%
Investment property 1-4 75.01%

However, these guidelines shouldn’t affect most applicants. If your LTV is lower than Fannie Mae’s High-LTV refi minimums, then you’ll likely be able to refinance the normal way.

You can learn about standard refinance types and their benefits here.

High-LTV refinance appraisals

If your loan application can be underwritten electronically (as in most cases), you may be eligible for an appraisal waiver. That means you won’t have to pay for a home appraisal with your refinance. Appraisals typically cost $300-$400.

Per Fannie Mae: “For certain loan casefiles, DU* will offer an appraisal waiver — an option to deliver the loan to Fannie Mae without an appraisal. Otherwise, an appraisal with an interior and exterior inspection is required. If an appraisal is obtained, it must be used for valuation even if a waiver is offered by DU.”

That means if you get an appraisal during your refinance, 1) you’ll have to pay for it, and 2) the lender is required to use the appraised value as part of your application. So don’t let anyone order an appraisal unless you are sure that you did not receive a waiver.

*DU refers to Desktop Underwriter, Fannie Mae’s automated underwriting software.

What about mortgage insurance?

Fannie Mae’s HARP replacement program states that if you already have mortgage insurance, it must be transferred to the new loan at the same coverage rate. If you currently don’t have MI, you won’t need to obtain and pay for it.

If you have lender-paid mortgage insurance (LPMI), your coverage can also be transferred.

Guidelines for one national mortgage insurer (Genworth) specify that it will continue to insure mortgages, including High-LTV Refinances, that meet Fannie Mae’s guidelines. So it appears that mortgage insurers won’t stand in the way of your refinance under these programs.

Application and documentation HARP replacement program — no minimum credit score!

Fannie Mae’s program states that documentation for income, assets and employment will be “simplified.” Which could mean very different requirements, depending on the borrower profile — credit score, loan-to-value, debt and assets.

Fannie Mae guidelines state that, “There is no minimum credit score requirement except for loans underwritten under the Alternative Qualification Path.”

Interestingly, Fannie Mae’s FAQ section for lenders answers this question:

“If a lender obtains income, assets, or liabilities either in error or as a result of originally obtaining that data as part of a traditional refinance, is it their responsibility to deliver that data, and could it affect a borrower’s eligibility for the high LTV refinance option?”

In response, Fannie Mae says ”It is always the lender’s responsibility to investigate any contradictory and conflicting information, regardless of the source, and to ensure that the information delivered and used to underwrite the file is complete and accurate.” 

That suggests that you are better off not providing any more information than requested, and the lender may not request much.

Automated underwriting for high-LTV refinances 

Fannie Mae’s High-LTV Refinance Option uses automated underwriting software to set up most refinances. But Fannie also indicates that they will accept manual underwriting when warranted — such as for victims of identity theft or those with little-to-no credit history.

Usually, automated underwriting systems determine what documents you’ll need to provide after analyzing the application and calculating risk. You may need nothing more than confirmation that you’re still working at your job. Or you may be asked to supply a pay stub and bank statement.

Verify your eligibility for HARP replacement programs here. (Jan 15th, 2021)

HARP replacement program FAQ

What is the HARP loan program?

HARP, the “Home Affordable Refinance Program,” was created in 2009 so that homeowners with little or no equity still could benefit from low rates. HARP was intended for homeowners who had made all their mortgage payments on time, but couldn’t refinance because stagnant or falling home values kept them from building equity. HARP officially ended on December 31, 2018.

Is HARP still available in 2019?

The HARP loan program ended in December of 2018. It is no longer available for any new refinances. However, homeowners with a high loan-to-value (LTV) ratio can still take advantage of today’s low rates using Fannie Mae’s High-LTV Refinance Option.

Is there a new HARP program in 2019?

The only HARP replacement program available as of 2020 is Fannie Mae’s High-LTV Refinance Option, also called the HIRO Program. The other HARP replacement program, Freddie Mac’s Enhanced Relief Refinance (FMERR), ended in September, 2019.

Who qualifies for the HARP replacement program?

Homeowners that would have benefitted from HARP or FMERR might be able to refinance using Fannie Mae’s High-LTV Refinance Option. Fannie Mae’s HARP replacement program lets homeowners refinance with a 97.01% LTV or more. There are no credit score or debt-to-income requirements to qualify. Other rules may apply (see above).

What is the Freddie Mac Enhanced Relief Program (FMERR)?

Freddie Mac’s Enhanced Relief Refinance (FMERR) was a HARP replacement program started in November, 2018 — at the same time as Fannie Mae’s High-LTV Refinance Option (called HIRO or HLRO). Both programs helped homeowners with little or no equity refinance into a lower rate. However, FMERR ended in September, 2019. Homeowners who would have used FMERR to refinance should look into Fannie Mae’s HLRO program instead. 


What are today’s high-LTV refinance rates?

Refinance rates are subject to the ups and downs of the economy, and can even change more than once a day. In addition, they can vary from lender-to-lender by .25 to .5 percent. So shopping and comparing offers is pretty important. That’s easy to do here by completing one simple form.

Verify your refinance eligibility (Jan 15th, 2021)