[1]The Federal Housing and Finance Agency [2](FHFA) recently released their first quarter refinance report [3], revealing that refinance volume has increased in March, while mortgage rates remained near 20 month lows in February. The Home Affordable Refinance Program [4] (HARP) had 31,648 refinances, bringing the total refinances through this program to 3,302,102 since it began.
HARP volume represented six percent of total refinance volume in the first quarter of 2015, the report said. Borrowers with loan-to-value ratios greater than 105 percent accounted for 24 percent of the volume of HARP loans, in the first quarter, while eight percent of refinanced loans had a loan-to-value ratio greater than 125 percent.
The FHFA also reported, 28 percent of HARP refinances for underwater borrowers were for shorter-term 15-and 20-year mortgages. These build equity faster than traditional 30-year mortgages. In the first quarter, HARP refinances represented 14 or more percent of total refinances in Florida and Georgia, more than double the six percent of total refinances nationwide over the same period.
A lower delinquency rate was seen by borrowers who refinanced through HARP compared to borrowers eligible for HARP who did not refinance through the program, the report said.
HARP was enacted April 1, 2009 to help homeowners who are unable to access a refinance due a decline in their home value, the FHFA noted in the report. The program gives borrowers a chance to refinance by allowing them to transfer the existing mortgage insurance to their newly refinanced loan, or by allowing those without mortgage insurance on their previous loan to refinance with new coverage. HARP was expanded in 2012 to provide more access to the program for responsible borrowers. The program is set to expire December 31, 2015.
HARP Eligibility Criteria:
- Loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
- Loan must have been originated on or before May 31, 2009.
- Current loan-to-value ratio -- LTV -- (outstanding mortgage balance/home value) must be greater than 80 percent. There is no LTV ceiling.
- Borrower must be current on their mortgage payments at the time of the refinance.
- Payment history – borrower is allowed one late payment in the past 12 months, as long as it did not occur in the six months prior to the refinance.