February 19, 2013
The Federal Housing Finance Agency -- created in July 2008 to regulate secondary mortgage markets -- today released a monthly report [opens in PDF] detailing the number of homes refinanced through the Home Affordable Refinance Program (HARP), which was established in 2009 to assist homeowners unable to access a refinance due to a decline in the value of their home.
The 130,000 homeowners who refinanced in November 2012 (the most recent data available) brought the total number of refinances through HARP to more than 2 million since the program first began, including nearly 1 million in the first 11 months of 2012. HARP volume represented 23% of total refinance volume in November, up from 21% in October.
HARP assistance, only available to homeowners with loans through Fannie Mae or Freddie Mac, requires a loan-to-value ratio -- computed by dividing the outstanding mortgage balance by the home value -- of greater than 80%. Several other borrower requirements exist, but FHFA credits the removal of some such limitations (like removing a 125% ceiling on LTV) in October 2011 with the increased popularity of the program in 2012, a year in which nearly 1 million people refinanced through HARP in the first 11 months.
In November, 46% of the loans refinanced through HARP had LTV ratios greater than 105%, and 24% had LTVs greater than 125%.
Not only were more people able to refinance because of softer restrictions, but the opportunity to lock in a lower interest rate became too much to pass up as mortgage rates hit record lows in November.