By Daniel Duffield
In February, HARP refinance
activity saw a tremendous boost as a result of temptingly low mortgage rates
that spurred many homeowners to refinance their underwater properties through
the Home Affordable Refinance Program (HARP).
According to data released by the Federal Housing Finance Agency (FHFA)
on Tuesday, over 97,700 homeowners took advantage of HARP 2.0 to refinance
their mortgages, and during this timeframe, HARP refinances comprised a
noteworthy 21% of total mortgage refinances.
In terms of homeowner loan-to-value (LTV) ratio, roughly 22% of those
who refinanced through HARP in February carried LTV ratios exceeding 125%.
As during the final quarter of 2012, refinance activity has recently
been fueled by historically low rates which continue to hover just above
all-time lows, despite expert assertions that rates will rise once the Fed
discontinues its mortgage-backed securities (MBS) purchases.
At present, advantageously low interest rates continue to drive
refinance volumes ever higher, boosting the amount of HARP refinance loans
acquired while rates continue to fluctuate near record lows, according to the
FHFA.
Additionally, FHFA statistics indicate that February levels of HARP
refinancing have pushed the total number of government sponsored enterprise
(GSE) loan refinances up to roughly 2.36 million since the initialization of
the Home Affordable Refinance Program.
Furthermore, in February, borrowers with LTV ratios exceeding 105%
comprised 45% of HARP refinances, and 18% of underwater HARP refinances
were obtained by homeowners with 15 and 20-year mortgage loans. Consequently,
analysts believe that homeowners are currently attempting to build equity
faster to avoid repeating the severe damage caused by the burst of the housing
bubble.
Breaking down these HARP statistics by state, Nevada, Arizona, and
Florida, states that were most significantly affected by the housing crisis,
saw roughly 65% of all refinance through the HARP program.
Where is HARP 3.0?
Throughout its history, the Home Affordable Refinance Program has
received several updates which have broadened the pool of eligible borrowers
for this beneficial refinance option. Despite these improvements, numerous
underwater borrowers remain unable to qualify
for HARP due to owning mortgages not purchased by Fannie Mae or Freddie
Mac.
As a result, the concept of HARP
3.0 was introduced, which would effectively remove the requirements for the
HARP program pertaining to Fannie Mae and Freddie Mac. While this program would
benefit a wide range of borrowers, many experts have expressed doubt at whether
it will ever be passed. Furthermore, with interest rates remaining fairly low
and home prices rapidly increasing, an update to HARP may be deemed
unnecessary, as more and more underwater borrowers are seeing a slight equity
recovery with the current trends of the housing market.
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