Posted August 12, 2014Tweet
Fewer than 17,000 HARP 2.0 loans closed in May 2014, the fewest in any one month in more than two years.
Fewer HARP closings doesn't diminish the program's importance, however. In many states, HARP loans still account for more than one-fifth of all refinance activity; plus, more than 3.1 million HARP loans have closed nationwide.
The Home Affordable Refinance Program remains an important part of today's U.S. mortgage market.
The Home Affordable Refinance Program (HARP) is a government refinance program meant to help homeowners whose homes have lost value since purchase.
HARP was initially launched in 2009 as part of the Making Home Affordable initiative, a program which also launched the Home Affordable Modification Program, better known as HAMP.
The primary difference between the HARP and HAMP programs is that the Home Affordable Refinance Program is meant for homeowners who are current on their respective mortgages (i.e. not late on payments).
HAMP is for homeowners facing foreclosure, or whom are otherwise delinquent on their home loan.
HARP is often called the "Obama Refi", and it's backed via Fannie Mae and Freddie Mac exclusively. HARP's Fannie Mae version is called "Refi Plus". Freddie Mac's version is called the "Relief Refinance". These are brand names of the same mortgage product.
The qualification standards for the Home Affordable Refinance Program are low :
In addition, your mortgage payment history must be perfect for the last 6 months with no more than one late payment in the last 12 months.
When the Home Affordable Refinance Program was first launched in 2009, it was built to reach more than 7 million U.S. households. Through its first three years, however, it was clear that the program would fall short of its goal.
Through 2011, fewer than 1 million HARP loans closed nationwide.
To help HARP reach more households, then, in late-2011, the government re-wrote the program and re-tooled it. Changes were centered on two main ideas. First, make HARP more compelling to lenders so they'd make more loans; and, second, lower HARP qualification standards for U.S. homeowners.
For banks, the government removed particular underwriting liabilities which, under the original Home Affordable Refinance Program, had made lenders wary of refinancing another bank's loan. This change made cross-servicing refinances possible.
A homeowner with a Bank of America loan could now do a HARP refinance with Wells Fargo, for example. This wasn't so simple under HARP 1.
The second change in the Home Affordable Refinance Program targeted homeowners.
Under HARP 2.0, homeowners were given to permission to refinance irrespective of their home's equity. In the prior version of HARP, loan-to-value was limited to 125 percent. Today, HARP allows an unlimited LTV.
The good news is that there are 667,000 U.S. households currently HARP-eligible. The government has identified each, and is trying to make contact. If you have not yet been contacted, you can get started with a rate quote online anytime.
Through 2012, as HARP 2.0 gained traction, the program was exceedingly popular in states hard-hit by last decade's housing downturn. As a percentage of all closed refinances, HARP loans routinely topped 60% in places such as Nevada and Florida.
Today, HARP remains hugely important in Florida but rising home values have diminished the number of Home Affordable Refinance Program loans closed overall.
In May, for example, Georgia's HARP closings were highest relative to the other states. Rhode Island placed number two. Overall, the top 10 HARP states, by market share, were :
The states in which Home Affordable Refinance Program closings were less common in February included Montana (3.9%), South Dakota (3.7%) and North Dakota (0.5%).
Nationwide, HARP closings accounted for 15.4% of all closed conforming refinances.
Also notable is that Florida and Nevada topped the nation in HARP loans closed over 125% loan-to-value. In both states, approximately 7% of HARP loans required LTV of 125% or higher versus the national average of 1.55 percent.
For today's homeowners with lost home equity -- regardless of whether you've been turned down for the Home Affordable Refinance Program in the past -- it's a good time to check today's HARP mortgage rates. Mortgage guidelines vary by bank, and those guidelines are getting more loose, on the whole.
Compare today's rates with a online quote. Rates are available at no cost, with no obligation to proceed, and with no social security number is required to get started.
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
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2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.