It was last November that the 3-million milestone was reached in the Home Affordable Refinance Program (HARP). The Federal Housing Finance Agency (FHFA) registered a total of almost 40,000 mortgages, refinanced through HARP, solely in November, last year. The total 3.028 million of refinanced mortgages represents a great accomplishment for the millions of Americans struggling to deal with the consequences of the mortgage crash, in 2008.
The officials have redoubled their efforts to promote the HARP program in order to assist families and communities who depend on the information to refinance and get in better control of their finances.
HARP accounts for 1 in 4 refinanced loans
From the total of refinanced mortgages, a quarter has been through HARP. Moreover, the majority of the HARP refinanced loans had a very high debt-to-income ratio (greater than 125%). Loans with this high debt-to-income ratio are also known as underwater mortgages (ratios over 105%), and 40% of the HARP refinances belonged to this category.
There has been a sharp drop in HARP refinancing over the last month. The phenomenon does not apply to the government program alone, but to mortgage refinancing in general. The explanation comes from the rise of the mortgage rates from their historical lows. The FHFA reports that only 85,000 loans were refinanced through HARP from October to November in 2013, a drop from the 200,000 during the previous quarter and an average of nearly 300,000 in each of the four quarters before that.
An unsure future?
Right after being launched in April 2009, HARP struggled during its first months of application. The main purpose of the program was to provide homeowners with conditions for refinancing their mortgages in more convenient conditions. The program aimed particularly at low equity or negative equity loans. The real benefits of the program did not become apparent until the guidelines of application relaxed. It was during the last 2 years that almost 65% of the program’s total number of refinances occurred.
Under the current circumstances, it remains uncertain whether HARP will fulfill its initial goal of helping 4 to 5 million people refinance their home loans by 2015, the year when the program expires. At the moment only mortgages backed by Freddie Mac and Fannie Mae are eligible for HARP refinancing. Speculations have been made that an extension of the program to mortgages from other lenders could increase the number of prospects. Nevertheless, it remains unclear whether such an expansion will ever occur.