NEW YORK ( TheStreet) -- The government's Home Affordable Refinance Program (HARP) has helped a little over 2 million borrowers refinance their mortgages at lower rates, the Federal Housing Finance Agency said Tuesday.
Between January and November 2012, nearly 1 million borrowers refinanced their loans through the program, more than in any single year since the program's inception, on the back of record low interest rates and changes that made it easier for underwater borrowers to access refinancing.
HARP was established in 2009 to help borrowers with mortgages backed by Fannie Mae and Freddie Mac an opportunity to refinance their loans. But the program failed to help many borrowers who owed significantly more than their homes were worth.
In October 2011, the program was expanded, allowing even deeply underwater borrowers to refinance by removing a 125% cap on loan-to-value limits. Harp 2.0, as it's dubbed, also eliminated certain risk-based fees for those who refinanced into shorter-term loans and waived representation and warranties that lenders commit to in making loans owned or guaranteed by the agencies.The enhanced program was far more successful. From January through November 2012, 998,294 refinances were completed through HARP. In November alone, nearly 130,000 borrowers refinanced their mortgages, representing 23% of total monthly refinance volume. Notably underwater borrowers appear to be taking the most advantage of HARP. About a quarter of the November refinances included mortgages with a loan-to-value greater than 125%, while about 46% had a loan-to-value ratio of more than 105%. In November, HARP refinances represented 68% of those in Nevada and more than 56% of those in Arizona, where most borrowers still owe more than their homes are worth. Underwater borrowers are refinancing into shorter term 15- and 20-year mortgages that helps them pay off their principal faster, thereby building more equity in their homes. HARP is due to expire at the end of 2013. However, a new bill has been introduced in Congress to extend HARP by an additional year to 2014 and also ease the process further by eliminating appraisal costs, reducing upfront fees and ensuring consistent standards for all lenders. Read more on that plan here. President Obama is also still pushing for a universal refinancing plan that would allow borrowers with non-government-backed mortgages to refinance via the Federal Housing Administration. Analysts, however, doubt either of those plans will win approval in the Republican-controlled House. -- Written by Shanthi Bharatwaj in New York
>To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: email@example.com.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV