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100 days ago, the government announced updates to its HARP refinance program.
HARP stands for Home Affordable Refinance Program and is conventional mortgage "for underwater homeowners". It's an appraisal-less refinance for loans backed by Fannie Mae and Freddie Mac; the conforming mortgage equivalent of the FHA's FHA Streamline Refinance program.
Over HARP's first 100 days, this website logged 4,177 HARP Refinance requests via Rate Quote Widget -- the "Live Rate Quote" form shown at top-right. What follows is a statistical breakdown of those HARP Refinance requests.
The revised HARP refinance program was a long time coming. Underwater homeowners found little relief via HARP's first iteration. It's no wonder, therefore, that when HARP 2 was announced in October 2011, homeowners jumped all over it.
The pent-up demand for a product like HARP was huge. Within the first 24 hours, requests for HARP mortgage rates arrived at a furious pace, spurred by news coverage and online commentary. HARP queries slowed after those first few days.
Then, on November 14, HARP queries surged again. This was the day that Fannie Mae and Freddie Mac announced HARP "operational details" including HARP pricing structures, HARP product restrictions, and a HARP roll-out date of December 1 (which explains the spike on that same date).
HARP homeowners have been aware of the program's milestone dates and product interest tends to rise as these dates approach.
Since the New Year, interest in the HARP program among the nation's homeowners is rising.
Click here to get a HARP rate quote.
When the government's released its first version of HARP, the program helped underwater homeowners refinance their home loans, but loan-to-values were limited to 125%. This means that for every $100,000 you borrowed, you had to have at least $75,000 of home equity.
By contrast, the new HARP allows for unlimited LTV on fixed rate loans.
It's a good thing, too -- more than 40% of today's HARP applicants have a loan-to-value of 125% or higher so whether you own a condo in Florida or a home in Phoenix, no matter how much equity you've lost since you purchased, you can still be HARP-eligible and get a mortgage for your underwater home.
As mortgage rates have dropped to all-time lows, the value of a HARP Refinance to an underwater homeowner increases. HARP gives underwater homeowners the chance to refinance to today's low rates regardless of how high their loan-to-value happens to be.
9 out of 10 HARP applicants report mortgage rates north of 5 percent.
There's a lot of money to be saved with HARP and the government is doing what it can to help HARP homeowners take advantage. So much so that HARP applicants will not be subject to the same loan-level pricing adjustments as the rest of the refinancing world.
For loans with a 30-year term -- fixed or adjustable -- loan-level pricing adjustments are capped at 75 basis points. For 15-year fixed and 20-year fixed rate loans, LLPAs are removed in full.
In reducing and/or eliminating loan-level pricing adjustments, homeowners using HARP to refinance should expect to receive mortgage rates 0.125-0.250% lower than their non-underwater, home-owning counterparts.
Since HARP 2's release, the majority of HARP queries have come from states in which home values have soured.
Homeowners in California, Florida, Arizona and Georgia account for more than half of all HARP Refinance queries. Other states with high HARP query figures include Illinois, Virginia, and Michigan.
It's also notable that the overwhelming majority of HARP 2 mortgage rate queries have been for primary residences. There have been very few queries for second homes and investment properties (although both are HARP Refinance-eligible).
The most well-known feature of the revamped HARP Refinance program is that it allows unlimited loan-to-values on fixed-rate mortgages. Appraisals aren't even necessary, in most cases.
Under the new HARP guideline, it doesn't matter if how far your home is underwater -- you don't need home equity to refinance. This means that residents of Nevada -- where self-reported LTVs top 151% -- can breathe easy . So long as you meet the HARP program's other mortgage guidelines, you'll be approved.
The same is true in other high loan-to-value states including Arizona (137% LTV) , Florida (131% LTV) and Michigan (121%).
Even in states like Ohio and Tennessee, HARP's unlimited LTV rule is a plus. Values are down like they are in Miami or Las Vegas, but values are down. With less home equity, homeowners in Cincinnati and Nashville, for example, have been completely shut out from a refi.
With the new HARP program, refinancing to lower rates is now possible.
When a homeowner can refinance and save money, it's good for the U.S. economy. Each refinance type yields direct economic benefit -- locally and nationally.
The HARP Refinance program was re-released with a nod to these three loan types. Not all households will meet the new HARP mortgage guidelines, but those that do will have a lot to gain.
Read the HARP Refinance tutorial here.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
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