03 Jan Are these HARP notices a scam?

Q. I keep getting notices about HARP paying off my mortgage. How are they going to do that? I already have a mortgage that is below the going interest rate. I hesitate giving the personal information they want, so what is the scam?
— Concerned homeowner

A. We’re glad you’re suspicious. There are plenty of scams out there trying to take advantage of those who are struggling to pay their bills.

HARP stands for the Home Affordable Refinance Program.

It’s a free government program born out of the 2007-2008 financial crisis designed for homeowners who have seen a drop in their property values, causing their mortgages to be considered under water, said Matthew DeFelice, a certified financial planner with U.S. Financial Services in Fairfield.

If you owe more than your home is worth — meaning you have negative equity — and if you’re current on your mortgage payments, you could be eligible to refinance up to twice your home’s value to take advantage of a lower rate and save money on your payments, DeFelice said.

However, HARP will not pay off your mortgage balance for you. That’s still your responsibility, he said.

DeFelice said to qualify for a HARP refinance, you must meet specific requirements. Your mortgage must be a Fannie Mae or Freddie Mac loan that was originated on or before May 31, 2009. The amount of your loan to the value or your home, called the loan-to-value ratio, must reach 80 percent or more. You also have to be current on mortgage payments with no late payments in the past six months, and you have not had more than one late payment in the past 12 months.

However, if your mortgage interest rate is lower than current rates, HARP likely won’t help you, DeFelice said.

“It was really designed to help people who were locked in to higher interest rates and were unable to refinance through traditional means because their home had fallen so much in value,” he said.

For those folks who can benefit from a HARP refinance, there are indeed some scams to worry about.

“Homeowners who have fallen for HARP-related scams may have been contacted by a third party other than their lender to discuss refinance options and were asked to fill out paperwork with their personal information, or charged a fee for counseling,” DeFelice said. “They may also have been told that the third party would handle all interaction with the lender.”

To avoid being taken advantage of, DeFelice offered some tips to use as general guidelines.

Know that help through HARP is free — other than loan closing costs. There is no need to pay a lender or lawyer for advisory services to guide you through the process.

“Don’t let anyone pressure you into signing any papers immediately,” he said. “Don’t sign any documents you don’t understand – especially paperwork that involves your home and a third party.”

Never make a mortgage payment to anyone other than your mortgage company, and watch out for websites not associated with your lender that may be misusing or misrepresenting HARP. Look for the official HARP logo or visit the official HARP.gov website for complete information.

“When you get offers to refinance through HARP, do a quick Google search to learn more about the company behind the offer to make sure it is legit,” DeFelice said.

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This post was first published in January 2018.