A total of about 900,000 refinancings were approved during the quarter, about 200,000 of which were through the Home Affordable Refinance Program (HARP), according to the report.
As of the end of the third quarter, a total of 778,000 HARP refinancings had been approved for the year. To date, more than 2.9 million homeowners have refinanced through HARP since the program began in April 2009, according to the report.
HARP volume represented approximately 23% of total refinance volume in the third quarter, the report states. Borrowers with loan-to-value (LTV) ratios greater than 105% accounted for 36% of the volume of HARP loans.
The number of completed HARP refinances for deeply underwater borrowers – those with LTV ratios greater than 125% – continued to represent a significant portion of total HARP volume, the report states. Sixteen percent of the loans refinanced through HARP in the third quarter had higher LTV ratios.
HARP continued to account for a substantial portion of total refinance volume in certain states. Through the third quarter, HARP refinances represented 57% of total refinances in Nevada and 49% of total refinances in Florida – more than double the 22% of total refinances nationwide over the same period.
HARP was originally set to expire on Dec. 31, 2013, but was extended to expire on Dec. 31, 2015.
In September the FHFA launched a new website and hired HGTV personality and Power Broker star Mike Aubrey to help raise awareness about HARP, which has been less popular with borrowers than was initially expected. The new website, www.harp.gov, and celebrity endorsement are part of a nationwide campaign to boost HARP participation rates.
Launched in 2009 as a joint project of the FHFA and the Treasury Department, HARP was designed to assist borrowers with existing mortgages owned or guaranteed by government-sponsored enterprises (GSEs) Freddie Mac or Fannie Mae with refinancing, even if they had little or no equity, or were underwater.
Initially, the FHFA had forecast that 4 million to 5 million borrowers would take advantage of the program, but by September 2011, the participation rate was less than 1 million. In response, the FHFA, along with the GSEs and other industry stakeholders, identified several issues that were deterring homeowners from using the program, including the fact that loans with loan-to-value (LTV) ratios greater than 125% were not eligible for HARP refinances and that the program's short duration (approximately 15 months) was discouraging lenders from participating.
After soliciting feedback from stakeholders, many of the problems with HARP were addressed, compromises were made and in October 2011, a re-branded program, ‘HARP 2.0,’ was launched. Changes included removing the 125% LTV ceiling and extending the duration of the program by 18 months.
Since that last round of changes, however, participation has continued to decelerate. According to the FHFA, HARP refinancing volume continued to drop during the second quarter of this year – although volume remains at above-average levels prior to program changes implemented last year.
Meanwhile, the Office of the Inspector General has identified additional barriers to HARP participation and a new round of modifications to the program has been proposed; however, the so-called ‘HARP 3.0’ program is yet to be approved and codified.
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