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Examining Refi Performance

The Federal Housing Finance Agency (FHFA) recently released its Q3 2018 Refinance Report. The report, which covers data from Fannie Mae and Freddie Mac as well as the Home Affordable Refinance Program (HARP), found that the GSEs completed 253,135 refinances in Q3 2018, slightly down from Q2’s 299,460.

Meanwhile, borrowers completed 1,865 refinances through HARP, down from 2,973 in Q2. Refinances through HARP have been on the decline, as they fell year over year by almost half between 2016 and 2017, dropping from 67,115 to 36,355 in that time frame.

The report notes that the newest numbers bring the total number of HARP refinances since the program's 2009 inception up to 3,493,005. HARP represents one percent of the total national refinance volume. Locally, HARP refinances represented 2 percent of total refinances in Florida, Michigan, Georgia, and Illinois, while nine states and one territory accounted for over 70 percent of the nation's HARP-eligible loans with a refinance incentive as of June 30, 2018.

HARP is scheduled to come to an end on December 31, but according to this new data, 38,818 borrowers may still be eligible for a HARP refinance. Borrowers with a remaining balance of $50,000 or more on their mortgage, a remaining term on their loan of greater than 10 years, and a mortgage interest rate that is at least 1.5 percent higher than current market rates still meet the basic HARP requirements. The FHFA states that “these borrowers could save an average of $2,290 annually by refinancing their mortgage through HARP.” Borrowers who refinanced through HARP had a lower delinquency rate compared with borrowers eligible for HARP who did not refinance through the program.

According to the report, borrowers with loan‐to‐value ratios greater than 105 percent accounted for 16 percent of the volume of HARP loans. In September 2018 specifically, 6 percent of loans refinanced through HARP had a loan-to-value ratio greater than 125 percent. Additionally, 33 percent HARP refinances for underwater borrowers were for shorter‐term 15‐ and 20‐year mortgages, which, according to the FHFA, build equity faster than traditional 30‐year mortgages.

Find the complete FHFA Refinance Report here.

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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