Mortgage Refinances Slow Under HARP
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- Kara Johnson | September 10, 2010
The pace of mortgages refinanced under the government’s Home Affordable Refinance Program (HARP) slowed in the second quarter of the year, despite falling interest rates that made refinancing more attractive to homeowners.
More than 88,000 mortgages were refinanced under HARP in the second quarter of 2010, bringing the total to 380,000 mortgages refinanced since the program was launched in spring 2009. That represents nearly one-quarter of all mortgages refinanced under the program since it was launched in spring 2009.
Even so, the pace has been slowing over the past two quarters. The new total is down from the 101,000 refinanced in the second quarter of the year, which in turn was down from 120,000 in the fourth quarter of 2009.
Refinace up to 125 percent loan-to-value
That was the high-water mark of the program to date and came during a quarter when Fannie and Freddie raised the loan-to-value limit for mortgages refinanced under the program to 125 percent, up from 105 percent previously. That opened up the program to a lot more underwater homeowners, the program’s primary target.
Even so, the program remains well off the pace of its original goal of refinancing 3-4 million mortgages before it expires, now set for June 30 2011.
The figures are from the Federal Housing Finance Agency, which today released its newest report on mortgage refinance and loan modification performance by the two government-supported enterprises.
Permanent loan modifications increase 65 percent
The total number of permanent loan modifications on Fannie and Freddie mortgages authorized though the Home Affordable Modification Program (HAMP) increased 65 percent during the quarter, to nearly 225,000. That represents a gain of 89,000 from the 136,000 cumulative total reported at the end of the first quarter.
HAMP is the loan modification counterpart to HARP under the government’s Making Home Affordable anti-foreclosure program.
Over 202,000 homeowners with Fannie or Freddie mortgages were reporting in trial modifications under HAMP during the second quarter, down from 448,000 in the first quarter of the year. With only 89,000 permanent modifications granted, that suggests that many of those borrowers left the program after being declined permanent status.
Private loan modifications outpace HAMP
Many borrowers who washed out of HAMP have subsequently obtained private loan modifications from their lenders, though perhaps at terms less favorable than offered by HAMP. The Hope Now alliance recently reported that proprietary loan modifications are outpacing HAMP at a 3-to-1 ratio.
Foreclosures on Fannie Mae and Freddie Mac properties rose in the second quarter. Foreclosure starts were up 12 percent, to 275,000 properties, while completed foreclosures and third-party sales were up 15 percent, to more than 112,000.
Loan delinquencies of 60 days or more declined for the second straight quarter, posting a 7.0 percent drop to 1.6 million, down by 122,000. At the same time, short-term delinquencies of 30-to-59 days rose by 9.1 percent, an increase of 55,000 to 664,000 properties.
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