More borrowers are looking to revise and replace their old loans and receive new ones with better conditions, according to the Federal Housing Finance Agency's (FHFA) monthly April 2015 Refinance Report. Refinance volume increased for April 2015, while mortgage rates remained near 20 month lows in March.
According to the report, the Home Affordable Refinance Program (HARP) had 11,716 refinances that were completed through HARP in April, bringing the total refinances through HARP to 3,313,818 since the program began in 2009. HARP refinance volume represented 5 percent of total refinances in April. HARP was extended to an additional year on May 8, 2015 and will now expire on December 31, 2016.
The FHFA also reported that this year, through April 2015, borrowers with loan-to-value ratios greater than 105 percent made up 24 percent of HARP loan volume. Approximately, 7 percent of the loans refinanced through HARP had a loan-to-value ratio greater than 125 percent in April.
Twenty-eight percent of HARP refinances year to date through April 2015 for underwater borrowers were for shorter-term 15-and 20-year mortgages, which build equity faster than traditional 30-year mortgages, the report found. During this same time period, HARP refinances represented 13 percent or more of total refinances in Florida and Georgia, more than double the 6 percent of total refinances nationwide over the same period.
A lower delinquency rate was seen by borrowers who refinanced through HARP compared to borrowers who were eligible for HARP but did not use the program to refinance, the report said.
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.
Click here to view Federal Housing Finance Agency's Refinance Report.