HARP Continues to Get Stronger


Filed under: HARP


HARP AGAINBack in December, we wrote an article on HARP (Home Affordable Refinance Program) and how the government program is aimed at helping struggling homeowners take advantage of low interest rates. In 2012, this program helped approximately 1.1 million borrowers, which was twice as many as in 2011. And, in 2013, the program is becoming even more popular!

According to a recent article in USA Today, HARP “is finally living up to expectations,” said Mark Zandi, chief economist of Moody’s Analytics. Almost 2.2 million homeowners since 2009 have done a refinance using HARP, and Fannie Mae estimates that these homeowners are saving about $4,300 per year on these refinanced home loans.

In addition, Bob Waters, chief economist for Quicken Loans indicates that there are almost three million more borrowers who may be eligible for HARP. He added that many borrowers who may qualify “believe it’s too good to be true” and may not realize that the program is specifically designed to help borrowers refinance even if falling home prices have left homeowners with too little equity or has left them owing more on loans that their homes are worth.

For a homeowner to be eligible for HARP, applicants must have loans owned or guarenteed by Freddie Mac or Fannie Mae, have less than 20% equity, and be current on their payments.

According to the Federal Housing Finance Agency (FHFA), once HARP was modified in late 2011, its volume almost doubled in the first quarter of last year. HARP has definitely been more important for homeowners who couldn’t otherwise refinance and have access to today’s historically low interest rates. And, HARP has also been a positive for the overall housing market.

The FHFA data shows that in December of 2012, 25% of HARP refinances were to borrowers who owed at least 25% more on their loans than their homes were worth. And, HARP refinances accounted for 22% of Freddie Mac and Fannie Mae refinances in the fourth quarter of last year. This was an increase of 10% from a year earlier. This indicates that HARP demand has become stronger and will most likely continue in that direction.

The success of the program has been especially seen in those states that were devastated most by the collapsing home values, including Nevada, Arizona, Michigan, and Florida, where HARP has accounted for 30% or higher of Freddie Mac and Fannie Mae refinances since 2009.

If you happen to have your loan with Freddie Mac or Fannie Mae and are interested in the Home Affordable Refinance Program, please give me a call to discuss the intricacies of the program.

 


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