The United States government relaunched its Home Affordable Refinance Program October 24, 2011 -- 12 months ago last week.
Since its re-release, HARP 2.0 has helped more than 618,000 U.S. homeowners refinance into this year's lowest mortgage rates of a lifetime. The program is on pace to reach one million households before the start of 2013 -- nearly triple the pace of the Home Affordable Refinance Program's initial iteration from 2009.
The key to HARP 2's success? Allowing unlimited loan-to-value (LTV). Whereas the original HARP limited LTV to 125%, via HARP 2, Home Affordable Refinance Program participants remain program-eligible regardless of how far underwater they are with their homes.
Homeowners in some states, of course, have benefitted more than others.
The Home Affordable Refinance Program was introduced in early-2009. An economic stimulus plan, it gave homeowners access to mortgage rates for which they otherwise weren't qualified.
At the time, the U.S. economy was sinking and so were home values. Furthermore, access to mortgage lending dried up as private banks withdrew and mortgage insurers closed. Millions of U.S. homeowners wanted to refinance to lower mortgage rates, but couldn't.
Meanwhile, the government knew the power of the refinance both to U.S. households and the economy overall. So, it crafted a streamlined refinance program along the lines of an FHA Streamline Refinance or a VA IRRRL loan.
Via the Home Affordable Refinance Program, homeowners showing good payment history and meeting basic underwriting criteria would be granted access to the same low mortgage rates as everyone else in the country, regardless of whether their respective homes had lost value. Best of all, HARP waived mortgage insurance requirements. If you didn't pay PMI before you used HARP, you wouldn't pay PMI after you used HARP.
Unfortunately, though, the initial HARP guidelines were crafted with a key program limitation -- a homeowner's loan-to-value was not permitted to exceed 125%. Because of this rule, HARP fell short of meeting its initial program expectations.
In 2009, the government expected 7 million households to get help via HARP. By mid-2011, it was clear that goal would get missed.
To juice the HARP loan market, then, HARP 2.0 was built. It removed all LTV restrictions.
Since the launch of HARP 2 in October 2011, this website has logged more than 35,500 requests for HARP mortgage rates. From these queries, it's clear that homeowners in some states benefit more from HARP's new, unlimited LTV clause than do those in others.
For example, in Nevada, the median loan-to-value of a HARP mortgage applicant in 145%. Under the original HARP program, these Nevada homeowners would be refinance-ineligible. Under HARP 2.0, it's smooth sailing. The median loan-to-value is over 125 percent in two other states, too -- Arizona and Florida. Via HARP 2, homeowners in these states get access to great rates.
The ten states in which rate queries show the highest median LTV are :
The three states in which median loan-to-value is the lowest are North Dakota (90%), Alaska (91%), and Wyoming (95%).
The HARP program is flexible and easy-to-use. You can refinance via any participating HARP lender, and mortgage rates are often low. There is no premium or penalty for using the Home Affordable Refinance Program.
To check how HARP can help your mortgage, get started with a rate quote online. They're fast and free, and social security numbers are not required.
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.
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Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.