With the help of record-low mortgage rates, HARP refinances surged in May, accounting for 20 percent of all loans refinanced by the GSEs, FHFA announced Monday.
For the month of May, 67,456 loans were refinanced through HARP, and the total number of loans refinanced by Fannie Mae and Freddie Mac for the month was 341,209. The one in five ratio of loans refinanced through HARP is the largest increase since the program’s 2009 inception.
“These numbers show HARP 2.0 is accomplishing the goals set forth—to provide relief to borrowers who might otherwise be unable to refinance due to house price declines,” said FHFA Acting Director Edward J. DeMarco. “Borrowers with Fannie Mae- or Freddie Mac-backed loans who are current on their underwater mortgages are taking advantage of the opportunity offered by HARP 2.0.”
The number of underwater borrowers who found relief through HARP also saw a significant increase. Year-to-date through May, 78,273 refinances were completed for underwater borrowers compared to 59,991 refinances for underwater borrowers for the entire year of 2011.
Since the program began, Fannie Mae and Freddie Mac have refinanced 1.3 million loans through HARP.
In March 2012, the GSEs launched HARP 2.0, which allowed mortgages with a loan-to-value (LTV) ratio of 125 percent or higher to be eligible for refinancing.
Following this change, the percentage of those with high LTVs who received refinancing doubled. In May, borrowers with LTVs greater than 105 percent accounted for 32 percent of HARP refinances, up from the 15 percent average in 2011.
The percentage of those who opted for shorter term 15- and 20-year mortgages increased to 19 percent in May compared to the 10 percent average in 2011. Choosing shorter term mortgages over a 30-year mortgage helps build equity more quickly.
In Nevada, Arizona, Michigan and Florida, HARP refinances accounted for 40 percent of all refinances in those states compared to the 20 percent nationwide average.
In Nevada and Arizona, underwater borrowers represented more than half of those refinanced through HARP, and in Florida, Idaho, and California, underwater borrowers represented 40 to 50 percent of HARP refinances.
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