Will Extending HARP Do Much?

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The Federal Housing Finance Agency (FHFA) recently announced that it is, once again, extending the Home Affordable Refinance Program – this time for another 15 months through Dec. 31, 2018.

The program, which was set to end on Sept. 30, has been used by about 3.5 million struggling borrowers to refinance their homes at lower mortgage rates, thus lowering their monthly mortgage payments.

But after years of continual home price gains, the HARP-eligible borrower pool is relatively shallow. As of the end of July, there were only about 108,000 borrowers who would meet HARP eligibility requirements and who have at least 75 basis points of interest rate incentive to refinance through the program, according to Black Knight’s most recent Mortgage Monitor report.

As the report points out, HARP eligibility is limited for the 2.5 million active GSE mortgages with current loan-to-value ratios above 80% due to the requirement that loans must have been originated pre-June 2009.

Even if HARP was extended to include mortgages originated up until January 2012, it would only expand the pool of eligible borrowers by approximately 50,000, according to the report.

According to the FHFA, more than 143,000 homeowners could still benefit from refinancing through HARP.

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