The HARP Refinance program "relaunched" in mid-March 2012. The revamp -- dubbed HARP 2 -- makes it easier for "underwater homeowners" to refinance to today's low mortgage rates.
Where the original HARP fell short of expectations, HARP 2 shines. The re-release includes fewer restrictions, faster underwriting, and, in many cases, throws out the need for an appraisal. HARP 2 allows for unlimited LTV and U.S. homeowners, dogged by sagging home values since 2007, are taking advantage.
In HARP 2's first few months, this website has logged 20,090 HARP Refinance requests via the "Live Rate Quotes" form shown at top-right. What follows is an anonymous, statistical breakdown of these initial HARP mortgage applicants.
Each week, more U.S. homeowners clue into the revamped HARP refinance program. Ample press coverage and straight word-of-mouth have helped to release a ton of pent-up demand for "underwater mortgages".
The pattern since last fall shows there's room to run, too. Save for a slow start in October 2011 when few households knew what HARP and the Making Home Affordable program was, and a spike in March 2012 when the HARP 2 program rolled out nationwide, demand for the HARP refinance program has been remarkably steady.
Demand for the HARP program is expected increase through 2012, too, and through the program's December 2013 expiration.
Mortgage lenders are getting better about underwriting HARP 2 mortgages and the first wave of HARP-using households now have success stories to share with neighbors and family. The government estimates that 7 million households will take advantage of HARP.
Based on HARP statistics to date, that's a realistic figure.
HARP 2 is billed as the mortgage for "underwater homeowners". Much like the FHA Streamline Refinance, HARP waives loan-to-value requirements. This is a big deal because HARP's first iteration in 2009 had a hard cap at 125% loan-to-value.
HARP 2 allows for unlimited loan-to-value. No matter how much you owe own your home, and no matter how much your home is worth, if you've been paying on your mortgage as agreed and meet the HARP program's other basic requirements, lenders will underwrite and approve your HARP mortgage application.
This is good because more than 80% of HARP applicants have negative home equity.
Not surprisingly, high-LTV HARP mortgage application are concentrated by geography with hard-hit states such as California and Arizona, and cities such as Las Vegas and Phoenix, well-represented. Some homeowners in these areas have loan-to-values in excess of 200%.
For HARP 2, that's irrelevant. All LTVs are now HARP-eligible.
Prior to HARP, there was no way for underwater homeowners to join today's Refinance Boom; it's been in-process since 2008. But now, with the HARP refinance program in place, HARP homeowners are finding that refinancing to today's low mortgage rates makes great financial sense.
Freddie Mac reports that the national average 30-year fixed rate mortgage rate is 3.67 percent for homeowners willing to pay 0.7 discount points and a full set of closing costs. For 94.76% of today's HARP applicants, that Freddie Mac rate represents a more than 100 basis points reduction off what they're paying now.
For 68 percent of HARP applicants, it's a two percent savings.
That's a huge amount of savings and is one reason why HARP is a quasi-economic stimulus program. As households refinance via HARP and lower their monthly payments, it frees up cash for discretionary spending, which helps spur economic growth.
The revamped HARP program has unlocked pent-up demand for mortgages -- especially in states hard-hit by falling home values. It's no surprise, therefore, that California and Florida dominate the HARP landscape. Together with Arizona, Georgia and Michigan, these 5 states account for more than half of the country's HARP refinance requests.
The next 5 HARP-heavy states -- Illinois, Nevada, Virginia, Maryland and Washington -- account for just 18% of the total HARP queries.
It's also notable that nearly all HARP refinance requests have been for primary residences. There have been very few queries for second homes and investment properties (although both types remains HARP Refinance-eligible).
The HARP refinance program is saving households money. This is good for the national economy, for local economies, and for personal economies. Less money spent on mortgage interest is more money spent on everyday living and/or saving.
HARP creates a "pay raise" effect.
Not all underwater households meet today's HARP 2 mortgage guidelines, but those that do have much to gain. The rest of you should wait for HARP 3 (which is rumored to be right around the corner). When HARP 3 hits, the next wave of HARP refinancing begins -- and it will be a huge one.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Sarah M. Office Manager
The Mortgage Reports has been an invaluable resource to me -- it helped me to pick the sweet spot to refinance. Thanks!
Thomas D. Software Developer
As a first time home buyer, The Mortgage Reports has been the only voice that I can trust, and the expertise has been helpful.
Jerolyn C. CPA
The Mortgage Reports isn't just basic mortgage rate information -- it's analysis on rate changes and trends, and updates on the laws in lending. Subscribing to the site's daily updates is worthwhile.
2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)