WASHINGTON (7/17/12)--One in five mortgages refinanced in May were refinanced through the Home Affordable Refinance Program (HARP), marking the largest market share percentage that program has seen since it began operating in 2009, the Federal Housing Finance Agency (FHFA) reported.
More than 78,000 HARP refinances have been completed as of May 2012, exceeding the total number of HARP refinances completed in 2011, the agency noted. HARP refinances have been most prevalent in Arizona, Florida, Michigan and Nevada, where they accounted for 40% of the mortgages that were refinanced in each of those states.
More than half of those that used HARP to refinance in Arizona and Nevada were underwater on their mortgages, and 40% to 50% of California, Florida and Idaho HARP refinancers owed more than their homes are worth.
The FHFA in a release said the increased volume of HARP refinances is partly due to record low 30-year mortgage rates. However, the FHFA said recent changes to the program also contributed to the increased volume.
"These numbers show HARP 2.0 is accomplishing the goals set forth--to provide relief to borrowers who might otherwise be unable to refinance due to house price declines," FHFA Acting Director Edward DeMarco said.
The Obama Administration last October revised HARP by:
- Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
- Removing the 125% loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
- Waiving certain representations and warranties made by lenders on loans owned or guaranteed by Fannie Mae and Freddie Mac;
- Eliminating the need for a new property appraisal where there is a reliable automated valuation model estimate provided; and
- Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to Fannie Mae and Freddie Mac on or before May 31, 2009.
Senate Democrats earlier this year encouraged the FHFA to make further efforts to allow refinancing by homeowners with Fannie Mae and Freddie Mac mortgages. In a letter to DeMarco, the senators said the FHFA should reduce or eliminate loan-level price adjustments for HARP refinances where Fannie and Freddie already carry credit risk, and streamline the refinance process for homeowners with more than 20% equity in their homes.
For the FHFA release, use the resource link.