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February 26th, 2013

HARP refinances reach a milestone



mortgage appHARP has received a lot of criticism since its inception back in 2009. Admittedly, I’ve been one of the many critics who challenged the program to live up to its stated potential. Recent expansions of the program have opened it up to a wider audience, targeting the most underwater borrowers.

While the program certainly got off to a slow start, it finally seems to be gathering serious momentum, according to the Federal Housing Finance Agency’s November 2012 Refinance Report.

Positive figures all around

If you’re a regular reader of this blog, you know that HARP refinances make up roughly 25 percent of all refinance applications as reported by the Mortgage Bankers Association. The FHFA reports similar numbers. According to the FHFA report, HARP represented 23 percent of total refinance volume in November of last year.

What I find particularly encouraging is that loans with high loan-to-value ratios are finally getting some serious attention. “In November, 46 percent of the loans refinanced through HARP had loan-to-value (LTV) ratios greater than 105 percent and 24 percent had LTVs greater than 125 percent,” according to the report.

Furthermore, some hardest-hit states are leading the country in HARP refinance volume. In Nevada and Florida, HARP refinances represented 68 percent and 45 percent of all refinances respectively. These figures towered over the 23 percent national average.

Finally, a sizeable portion of borrowers not only decided to refinance to lower their interest rate, but to also shorten their loan term. According to the report, 17 percent decided to refinance to either a 15-year mortgage or 20-year mortgage as opposed to a 30-year loan.

There’s no doubt that record-low mortgage rates continue to play a vital role in the refinance market. Expanding the HARP guidelines to include all underwater borrowers undoubtedly expanded the pool of qualified borrowers, but also, each time rates fall further, the scope of potential refinancers grows with it.

Nearly 1 million homeowners refinanced their mortgages between January and November 2012 alone.

2 Responses to “HARP refinances reach a milestone”

  1. Angela Says: March 6th, 2013 at 10:24 pm

    I have been trying to lower my rate via Harp w/ my current loan servicer, which is BOA, they have turned me away only because of Lpmi. They have told me over and over the only thing stopping them from doing a Harp for me is that one condition. We have 750 fico’s, no mtg lates, we are at 105% ltv. We are w/ Fannie Mae and my losn is from 6/08. Can they really deny us just for the lpmi. I don’t even remember being told anything about Lpmi during my application process or closing of my loan. Is there any way to put some pressure on BOA?

  2. Tim Manni Says: March 12th, 2013 at 3:32 pm

    Angela: Despite your denial, you still have options. Just because BofA won’t do a HARP refi with LPMI doesn’t mean another lender won’t. If your current loan has mortgage insurance, your new HARP loan must have the same amount of coverage. That’s where the snag comes in. As loan officer Dan Green recently wrote, “This process of replacing coverage can take an hour, or, in some cases, such as where LPMI applies, it can take up to three weeks or longer. Because HARP loans with PMI require extra work, and its unclear how long that work can take, many lenders choose to avoid such loans with PMI altogether. It doesn’t mean your loan can’t get done — it means your loan can’t get done at the bank at which you’re applying.” Shop around–don’t let one denial stop you. Thanks for commenting, keep us posted, Tim (HSH.com)

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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