HARP Mortgage Refinances Pick Up

By:: Peter King | December 07, 2011

Mortgage refinancing under the government’s Home Affordable Refinance Program (HARP) rose sharply in September, increasing 20 percent to 35,000 loans, the highest level in six months.

That’s up from 29,000 in August and 27,000 in July, with demand increasing as mortgage interest rates dropped. All told, the total number of mortgages refinanced through HARP increased by 11 percent during the third quarter of 2011, to nearly 930,000 loans since the program was launched in April 2009.

Only 1 in 6 HARPs more than 5% underwater

The new figures, released today by the Federal Housing Finance Agency, come just as new guidelines for HARP are taking effect. As of Dec. 1, the program’s former 125 percent loan-to-value limit for refinancing underwater mortgages has been lifted, and other changes made to make refinancing easier for homeowners in negative equity on their home loans.

That change is intended to make HARP more accessible to borrowers who are significantly underwater on their home loans. Although the current ceiling is 125 percent, in practice many lenders decline to refinance mortgages that are that far in negative equity. According to today’s figures, only 78,000 of all HARP refinances to date have been in the range of 105-125 percent loan-to-value – some 14 percent of all mortgages refinanced under the program.

HAMP loan modifications slowly declining

Meanwhile, loan modifications under the related Home Affordable Modification Program (HAMP) have continued at a relatively steady, but gradually declining, pace over the past year, according to FHFA. Some 42,000 trial modifications were under way at the end of the third quarter of the year, down from 51,000 at the end of the second quarter. Some 22,600 trial modifications were approved for permanent status during that same period.

Meanwhile, the number of seriously delinquent mortgages backed by Fannie Mae and Freddie Mac, which are in receivership under FHFA, continues to decline, though falling only slightly in the third quarter.

The inventory of foreclosed properties held by the two enterprises shrank for a fourth consecutive quarter, to 182,000 homes, down from 196,000 previously.

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