Top 10 States for HARP Refinances

By Daniel Duffield

Since its update in 2011, the Home Affordable Refinance Program (HARP) has provided numerous U.S. citizens with access to refinance loans that would otherwise be unattainable due to the widespread loss of equity caused by the burst of the U.S. housing bubble. Without this program, these underwater homeowners would be otherwise unable to obtain the currently low mortgage rates and thereby significantly reduce their monthly mortgage payments.

However, as with all trends within real estate, the effects of HARP have differed across different states. While HARP has been more beneficial in some states, others have found minimal use for this refinance program. As one might expect, the states most affected by the downturn of the housing market subsequently made the most use of HARP and had the most HARP applications.

Popular States for HARP Refinance Applications

In 2011, the federal government released an update to HARP, titled HARP 2.0, which significantly expanded the pool of borrowers eligible for a HARP refinance. Primarily, this was the result of loosened loan-to-value ratio (LTV) requirements; while the original HARP capped LTV at 125%, HARP 2.0 entirely removed this maximum limit, allowing borrowers to refinance with unlimited LTV. Borrowers located in states most affected by the decline of the U.S real estate market who previously were too underwater to refinance then found themselves able to obtain the advantageous HARP refinance loan, greatly lowering the overall costs of their home mortgages.

Taking into account the sharpest drops in home prices, as well as state population, one might not be surprised at the results of the survey which showed the percentages of HARP refinances from state to state.

The top 10 states for HARP refinance applications are:

1. California (18.39%)
2. Florida (15.66%)
3. Arizona (7.16%)
4. Georgia (6.31%)
5. Illinois (4.79%)
6. Michigan (4.62%)
7. Nevada (3.61%)
8. Virginia (3.37%)
9. Maryland (3.14%)
10. Washington (2.94%)

As mentioned, it may not be all that surprising that California tops the list, considering not only its population but the effects of the real estate decline. With larger cities such as San Diego, Los Angeles, and Sacramento taking significant losses as a result of the downturn, as well as smaller cities including Fresno, Stockton, and San Bernardino, California has seen a large portion of HARP refinances and may continue to do so if HARP 3.0 ever comes to fruition.

Readers should note that this list solely takes into account HARP applications, rather than HARP refinances that are fully completed. Due to the qualifications of the HARP program, many applicants do not qualify or have issues receiving approval, especially those with LTV’s exceeding 125%. Although HARP 2.0 removed these requirements, many lenders still cap LTV at this figure and will not finance HARP loans with these high LTV ratios, especially among the larger lenders.

On the other hand, some states were barely affected by the housing downturn and saw very minimal applications for HARP 2.0. For instance, North Dakota saw the fewest of these states, with only 0.01% of all HARP refinance applications being requested in this state. In addition to population factors, North Dakota was largely unaffected by the housing market bubble burst, showing steady gains within the past decade. Due to not losing equity, homeowners have had little reason to consider a HARP refinance loan.

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