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How the End of HARP Impacted the GSEs

Rising mortgage rates in the previous months resulted in a decrease in the total refinances at the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac in December 2018, according to the Q4 Refinance Report released by the Federal Housing Finance Agency (FHFA).

The report found that the GSEs completed 245,620 refinances in the fourth quarter compared with 253,135 in the prior quarter. Of these loans, 1,390 loans were refinanced through the Home Affordable Refinance Program (HARP) during the quarter.

It also indicated that the refinances done through HARP which ended in December 2018 would gradually taper off in 2019. In fact, at the end of the fourth quarter, HARP refinances represented just 1 percent of the total refinance volume at the GSEs. Borrowers completed 1,390 refinances through HARP bringing the total refinances through this program to 3.4 million from its inception.

Looking at the year-to-date impact of the program, the report found that borrowers with loan-to-value (LTV) ratios that were greater than 105 percent accounted for 16 percent of the volume of HARP loans and that 33 percent of HARP refinances for underwater borrowers were for 15- to 20-year mortgages that are known to build equity faster than the traditional 30-year fixed-rate mortgage. Breaking it down by state, the report indicated that more people opted for HARP in Florida and Illinois where it represented 2 percent of the total refinance volume compared with the national average of 1 percent.

In December, 9 percent of HARP loans had an LTV that was greater than 125 percent. The report also found that borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program. As of June 2018, "nine states and one territory accounted for 70 percent of the nation's HARP-eligible loans with a refinance incentive."

From April 2009 through December 2018, 2,918,957 loans refinanced through HARP were for primary residences, 110,887 were for second homes and 464,551 were for investment properties, the report indicated.

About Author: Radhika Ojha

Radhika Ojha is an independent writer and editor. A former Online Editor and currently a reporter for MReport, she is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Houston, Texas.
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