Monday, August 12, 2013

Harp continues to play a beautiful melody...

The HARP refinance program continues to aid to U.S. homeowners.
According to the Federal Housing Finance Agency (FHFA), nearly one hundred-thousand mortgages were closed under the Home Affordable Refinance Program (HARP) in May, raising the all-time tally to 2.65 million.
HARP is available to U.S. homeowners through December 2015.

HARP : Refinancing Underwater Homeowners Since 2009

The Home Affordable Refinance Program was first launched in February 2009. It was introduced as a way to help struggling U.S. homeowners lower their mortgage payments, and to help boost the national economy.
The recession was underway and home values were dropping. So were mortgage rates. Unfortunately, only specific groups of homeowners could capitalize.
FHA-backed homeowners, for example, had access to the FHA Streamline Refinance, an appraisal-less refinance program. Losing home equity didn't affect FHA-backed homeowners.
The same was true for military borrowers carrying a VA loan. Via the streamline IRRRL program, eligible VA homeowners could simply ask their bank for a refinance and, in most cases, it was awarded.
These two programs were models for HARP.
Via HARP, the government waived most home appraisal requirements, giving U.S. homeowners whose homes had lost equity access to the same mortgage rates as everyone else. There were just three criteria in order to be HARP-eligible.
  1. The homeowner's loan must be securitized by Fannie Mae or Freddie Mac
  2. The homeowner's loan must have a securitization date no later than May 31, 2009
  3. The homeowner must show a recent history of on-time payments
For people who met these conditions, the HARP program proved valuable and nearly one million Home Affordable Refinance Program loans closed before the government elected to update and relaunch to its popular refinance program.
Dubbed "HARP 2.0", the revamped Home Affordable Refinance Program included simpler approval standards and relaxed loan-to-value requirements. The changes  made HARP instantly available to millions of additional U.S. households.
In the year-plus since HARP 2.0 launched, there have been 150% more closings than during all of HARP 1.0's tenure.

HARP 2.0 : Tops In California, Florida, Michigan

When HARP was first announced in early-2009, it was a program expected to help 7,000,000 U.S. households lower their respective monthly mortgage payments. Four years later, however, HARP is well short of its target.
Through April 2013, there have been just 2.57 million HARP closings nationwide -- an average of 52,450 per month. It would take until May 2020 for HARP closings to reach 7 million at this pace. Unfortunately, the HARP program has just 17 months until its expiration.
This is one reason why talk of HARP 3.0 gets louder in Washington. Like HARP 2.0, such a program would break down barriers to entry and make the "Obama Refi" available more easily.
For now, though, HARP usage has been concentrated by state, with the Pareto Principle in effect. More than 80% of HARP closings have occurred in just 20 percent of the states.
  1. California (21% of program refinances nationwide)
  2. Florida (13% of program refinances nationwide)
  3. Michigan (10% of program refinances nationwide)
  4. Illinois (10% of program refinances nationwide)
  5. Arizona (7% of program refinances nationwide)
  6. Georgia (7% of program refinances nationwide)
  7. Washington (6% of program refinances nationwide)
  8. Minnesota (5% of program refinances nationwide)
  9. Ohio (5% of program refinances nationwide)
  10. New Jersey (4% of program refinances nationwide)
By contrast, there have been relatively few Home Affordable Refinance Program closings in Wyoming, Vermont, Alaska, South Dakota and North Dakota. The activity in these 5 states accounts for less than one-half of one percent of HARP refinance activity nationwide.

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