HARP Refinancing Remains Strong in January

By Daniel Duffield

2013 HARP Statistics

 In January, roughly 470,000 mortgages owned by either Fannie Mae or Freddie Mac were refinanced to obtain lower mortgage rates and alter mortgage terms. With approximately 97,600 borrowers completing this transaction by taking advantage of the Home Affordable Refinance Program (HARP), HARP refinances remain strong during the start of 2013.

HARP 2013 Statistics

Since the initiation of HARP in 2009, over 2.2 million home mortgage loans have been refinanced through this program, according to the statistics presented by the Federal Housing Finance Agency in its January report on the HARP program. Breaking down these refinances by property types, borrowers have utilized HARP on 1.97 million primary residences, while refinancing 72,396 second homes and 215,580 investment properties.

HARP Volume and LTV

Additionally, in January borrowers with loan-to-value (LTV) ratios that exceeded 105% represented 47% of the volume of HARP refinances, the report indicated.

Furthermore, the amount of finalized HARP refinances for borrowers with exceptionally high LTV ratios remains significant in comparison to the total HARP volume. For example, approximately 20% of HARP refinances loans were obtained by borrowers with HARP LTV ratios exceeding 125%, the FHFA demonstrated.

Regional HARP Statistics

HARP data can also be analyzed and broken down to examine the regional differences in borrower refinance trends. In January, HARP refinances constituted a substantial 66% of total refinances in Nevada, exceeding the 21% national average by more than triple. Similarly, HARP refinances represented 56% of all refinance activity in Florida during January, the report stated.

HARP Data by Loan Product

In January, roughly 18% of HARP refinances were acquired by underwater borrowers for mortgages with 15-year and 20-year mortgage terms, which accumulate equity and amortize more quickly than standard 30-year mortgages, according to the FHFA.

HARP Recap and HARP 3.0

 HARP Introduction

The Home Affordable Refinance Program was initially created in 2009 in response to the bursting of the U.S. housing market bubble. With home prices plummeting, the HARP program offered an opportunity for underwater borrowers, those who owe more than their property’s value, to refinance their mortgages and obtain significantly lower mortgage rates. Due to the strict LTV requirements of most loan products, HARP soon became the sole refinance option for millions of borrowers who lost the majority of their equity due to the housing market collapse.

HARP 2.0 

While those who could qualify for HARP were given significant advantages, the original incarnation of the program placed strict limitations on borrower LTV, despite its goal of helping such underwater borrowers. As a result, HARP was updated to HARP 2.0, and these LTV restrictions were removed, along with several other tweaks to the program. 

HARP 3.0?

Although a significant amount of borrowers can now qualify for this refinance, HARP 2.0 still only applies to borrowers with mortgages owned by either Fannie Mae or Freddie Mac, which still severely limits the amount of eligible borrowers. As such, many have speculated about the release of HARP 3.0, dubbed #myrefi, which is expected to remove this requirement, allowing many more borrowers to take advantage of HARP. However, no official release date has been provided for this program and many have expressed some pessimism that it will ever be released.

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