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Fewer Borrowers are Refinancing Through HARP

Time is winding down on the FHFA’s Home Affordable Refinance Program (HARP), and so is the number of borrowers completing refinances through the program, according to FHFA’s Refinance Report for the third quarter of 2016.

HARP is set to expire in less than a year (in September 2017). Approximately 15,500 homeowners took advantage of HARP in Q3, down from 18,000 in Q2; the numbers have been declining since the third quarter of 2012 when they peaked at 319,000 for the three-month period. To date, more than 3.43 million homeowners have completed a refinance through the program since its inception in 2009.

Loans refinanced through HARP represented 2 percent of all FHFA refinance activity in Q3, down from 4 percent in Q2. The highest share for HARP refinances for any one quarter occurred in Q2 2012, when 264,000 loans were refinanced through HARP—representing 27 percent of all FHFA refinance activity.

Originally set to expire at the end of 2013, HARP’s expiration date was extended to the end of 2015, then the end of 2016. In August 2016, HARP was extended until September 2017.

“The program is designed to provide these borrowers with an opportunity to refinance by permitting the transfer of existing mortgage insurance to their newly refinanced loan, or by allowing those without mortgage insurance on their previous loan to refinance without obtaining new coverage,” FHFA said in its report.

FHFA estimates there are approximately 242,000 borrowers still eligible to refinance through HARP as of June 30, 2016. About 65 percent of HARP-eligible borrowers were concentrated in 10 states (Florida, Illinois, Michigan, Ohio, Georgia, New Jersey, Pennsylvania, Puerto Rico, New York, and California), according to FHFA. In the last few years, the Agency has attempted to reach HARP-eligible borrowers by conducting outreach events in the cities with the most eligible borrowers, such as Chicago, Atlanta, Detroit, Miami, Newark, and Phoenix. The Agency’s outreach efforts have also included webinars, websites, and social media campaigns.

To be eligible for HARP, borrowers must have a loan owned or guaranteed by Fannie Mae or Freddie Mac, have a loan originated on or before May 31, 2009, have a current LTV of greater than 80 percent, be current on mortgage payments at the time of the refinance. Borrowers are allowed one late payment in the 12 months prior to the refinance as long as it did not occur in during the six-months period before the refinance. FHFA estimates these borrowers save an average of approximately $2,400 per year on mortgage payments.

Click here to view FHFA’s complete Refinance Report for Q3 2016.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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