Loans connected to the Home Affordable Refinance Program (HARP) represented 20% of total refinance volume in May, the largest increase since the program was launched in 2009, according to new data from the Federal Housing Finance Agency (FHFA).
The FHFA attributes the increased volume, in part, to record-low interest rates on 30-year mortgages and to the removal of the loan-to-value (LTV) cap and certain risk-based fees, enabling more borrowers to take advantage of HARP. During the first five months of this year, more than 78,000 refinances were completed, exceeding the total HARP refinances during all of 2011.
In May, borrowers with greater than 105% LTV accounted for nearly one-third of HARP volume. HARP refinances represented over 40% of total refinances in Nevada, Arizona, Michigan and Florida, compared to 20% nationwide. Underwater borrowers represented more than half of HARP volume in Nevada and Arizona and 40% to 50% of HARP refinances in Florida, Idaho and California.
"These numbers show HARP 2.0 is accomplishing the goals set forth – to provide relief to borrowers who might otherwise be unable to refinance due to house price declines," says FHFA Acting Director Edward J. DeMarco. "Borrowers with Fannie Mae- or Freddie Mac-backed loans who are current on their underwater mortgages are taking advantage of the opportunity offered by HARP 2.0."