Low Mortgage Rates Reinforce Strength of HARP Refis

By: Esther Cho, DSNews.com

Refinances through the government’s Home Affordable Refinance Program (HARP) remained strong as mortgage rates stayed near record-low levels, according to the Federal Housing Finance Agency’s (FHFA) most recent refinance report.

In February, 97,738 Fannie Mae and Freddie Mac loans were refinanced under the program, bringing the total to 2.3 million since HARP’s April 2009 inception. The agency also reported HARP refinances accounted for 21 percent of total refinance volume in February.

Of the 2.3 million refinances since inception, about 2 million were primary for residences, 233,000 for investment properties, and over 75,000 for second homes.

Underwater borrowers also continued to represent a large share total HARP refinance volume. Year-to-date through February, borrowers with loan-to-value ratios (LTVs) beyond 105 percent accounted for nearly half (45 percent) of all HARP refinances, according to FHFA data.

In Nevada, Arizona, and Florida, the share was even greater with underwater borrowers representing 65 percent or more of HARP volume over the first two months of the year. In California and Georgia, the share of HARP refis for underwater borrowers was 58 percent and 50 percent, respectively.

Out of the 195,327 total HARP refis seen year-to-date, 45,453 were for borrowers who were deeply underwater, or had LTVs greater than 125 percent.

Among the underwater borrowers, 18 percent opted for shorter-term 15-and 20-year mortgages, which build equity faster than traditional 30-year mortgages.

HARP, which was set to expire at the end of this year, will live on for two more years after receiving an extension into December 31, 2015.