More underwater borrowers are choosing to refinance their mortgages under the Home Affordable Refinance Program than at any time since the government program launched in 2009, according to the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA).[IMAGE]
The regulatory agency released a report Monday that found total refinance volume up by 20 percent in May.
The reasons why? According to the FHFA, record-low interest rates for 30-year fixed-mortgages couple with recent modifications to HARP to create the conditions for an ongoing refinance boom.
Recent modifications lifted fees and loan-to-value caps, fueling homeowner demand in a refinance environment with historically low interest rates.[COLUMN_BREAK]
Freddie Mac ""reported"":https://themreport.com/articles/mortgage-rates-tumble-on-disappointing-jobs-report-2012-07-12 last week that 30-year fixed-mortgages reached a new low of 3.56 percent on average, as a disappointing jobs report and trouble in Europe convinced more investors to stay with the safe haven of U.S. Treasury debt.
""These numbers show HARP 2.0 is accomplishing the goals set forth-to provide relief to borrowers who might otherwise be unable to refinance due to house price declines,"" FHFA Acting Director Edward DeMarco said in a statement. ""Borrowers with Fannie Mae- or Freddie Mac-backed loans who are current on their underwater mortgages are taking advantage of the opportunity offered by HARP 2.0.""
The FHFA said that more than 78,000 successful refinances crossed the finish line during the first five months of this year, exceeding totals for last year.
Nearly one-third of HARP volume stems from borrowers who refinance their mortgage loans with LTV thresholds of more than 105 percent.
According to the agency, many underwater borrowers also choose to refinance their loans into shorter-term 15- and 20-year mortgages to create equity faster than with 30-year loans.
In May, homeowners in states like Arizona and Nevada accounted for more than half of the total refinance volume under HARP.
Those in other hard-hit states like California, Idaho, and Nevada accounted for roughly 40 percent to 50 percent of HARP refinance volume.