FHFA – Federal Housing Finance Agency – reported the other day that during the first quarter of 2012 HARP refinances came in at 180,185 closed deals, signifying a healthy jump from the 93,190 HARP refis that were done in the 4th quarter of 2011. If this trend continues it will in its small way help stabilize the entire housing market.
HARP – Home Affordable Refinance Program – was launched in 2009 to help mortgage borrowers who are unable to refinance because their property values had recently absorbed some serious damage. As the real estate market collapsed they found themselves often severely underwater, meaning that their homes were worth less than the current mortgage balance. Only home loans owned by Fannie Mae or Freddie Mac are eligible for this program. To find out whether that is the case can be found out on their respective websites.
Some of the key points to know about qualifying for HARP is that the refinance has to meet at least one of these conditions: an interest rate reduction and/ or lower principal and interest mortgage payment, a fixed-rate mortgage replacing an ARM or an interest-only product and a reduction in the mortgage term, like from a 30-year to a 15-year home loan. And of course the borrower has to be current on his mortgage payments.
HARP rulebook has been tinkered with, now offering mortgage borrowers a new, less-restrictive edition called 2.0. It scrapped the LTV – loan-to-value – ceiling of 125% for refinances into fixed-rate products and also either reduced or completely threw away fees for select borrowers. These softer program features are credited with making the program more available to underwater homeowners seeking much-needed refinance help. The impressive numbers for the first quarter are there to prove it. In addition, mortgage interest rates have steadily headed south in the last several months which can’t hurt adversely-affected homeowners’ enthusiasm either to grab a HARP refinance to save some money.
The second quarter numbers are probably going to be equally encouraging. Anything to get this real estate market off the mat and stand tall again.