FHFA: 47% of HARP Refis in January Were for Underwater Borrowers

FHFA: 47% of HARP Refis in January Were for Underwater Borrowers

04/09/2013 BY: ESTHER CHO


In January, Fannie Mae and Freddie Mac refinanced about 97,600 loans through the Home Affordable Refinance Program (HARP), of which nearly half represented underwater borrowers, the Federal Housing Finance Agency (FHFA) reported Tuesday.

The agency’s report revealed 47 percent of loans refinanced through HARP in January had loan-to-value (LTV) ratios greater than 105 percent.

In addition, a quarter of the borrowers were deeply underwater, with 25 percent of loans refinanced throughHARP having LTVs greater than 125 percent.

For all of 2012, 44 percent of loans had LTVs greater than 105 percent. From the time of the program’s inception to December 2011, only 9 percent of loans had LTVs greater than 105 percent. In March 2012, HARP 2.0 became available, which broadened eligibility by removing theLTV ceiling previously set at 125 percent.

Of the HARP refinances for underwater borrowers, 18 percent were for shorter-term 15- and 20-year mortgages, which build equity faster compared to traditional 30-year mortgages.

Overall, since the program’s inception in 2009, more than 2.2 million loans have been refinanced through HARP. Of those loans, 1.9 million were for primary residences, while about 215,600 were for investment properties.

Out of all refinanced loans in January, 21 percent were through HARP. In Nevada, the share of loans refinanced through HARP was triple the national average at 66 percent.

Other states where HARP refinances accounted for a significant portion of total refinances in January were Florida (56 percent), Arizona (43 percent), Georgia (43 percent), and Michigan (40 percent).

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