After a seven-year run, the Home Affordable Refinance Program (HARP) is finally winding down. The program, which is set to expire on Dec. 31, has helped more than 3.4 million struggling homeowners retain their homes in the aftermath of the Great Recession.
The Federal Housing Finance Agency (FHFA), which oversees government-sponsored enterprises Fannie Mae and Freddie Mac and administrates HARP and its “sister” program, the Home Affordable Modification Program, reports that 18,310 borrowers refinanced their mortgages through HARP from Jan. 1 through June 30 of this year.
The FHFA’s second-quarter Refinance Report shows that although total refinance volume increased in June, as mortgage interest rates edged lower, HARP refinances represented only 4% of total refinances – the lowest percentage since the second quarter of 2009, when the program was first launched.
More than 323,000 U.S. borrowers are still eligible for the program and have a financial incentive to refinance as of the first quarter of this year, the FHFA reports.
These so-called “in-the-money” borrowers meet the basic HARP eligibility requirements, have a remaining balance of $50,000 or more on their mortgages, have a remaining term on their loans of greater than 10 years, and have mortgage interest rates at least 1.5% higher than current market rates.
These borrowers could save, on average, $2,400 per year by refinancing their mortgages through HARP.
About 60% of these eligible borrowers are located in 10 states – Florida, Illinois, Ohio, Michigan, Georgia, Pennsylvania, New Jersey, California, New York and Maryland.
The FHFA’s data shows that, through the second quarter, about 26% of HARP refinances for underwater borrowers were for shorter-term, 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.