Refinance Programs Give Underwater Owners a Lift

HARP Surpasses 2012 Estimates on Homeowner Refinances

States that were the hardest hit by foreclosures and have the highest number of underwater home owners are now leading the nation in refinancing as more borrowers look to decrease their monthly mortgage payments.

Following the government’s expansion last year of its refinancing programs, more underwater home owners are now able to take advantage and are unlocking savings to their monthly payments.

For example, in Nevada, home values fell by 50 percent during the housing downturn. Nevada now has the highest percentage of home owners taking advantage of the government’s refinancing program, the Home Affordable Refinance Program (also known as HARP). In Nevada, 68 percent of refinancings there in December were using HARP, the Federal Housing Finance Agency (FHFA) reports. In Florida, 58 percent of refinancers used HARP.

In 2012, there were 1.1 million HARP refinances nationwide, double the amount from one year prior, FHFA reports.

In Nevada, HARP accounted for 68 percent of refinancing in December.

“The biggest hurdle the housing market has to overcome to stay on its upward trajectory is keeping the foreclosure inventory down,” Diane Swonk, chief economist at Mesirow Financial in Chicago, told Bloomberg News. “HARP refis are keeping people in their homes, especially in the states where property is severely underwater.”

HARP started in 2009 and originally prevented borrowers from participating who had mortgages more than 25 percent underwater. But starting last year, HARP 2.0 removed that limitation. The new iteration also allows borrowers to refinance through any lender, not just their existing one.

About a quarter of the loans refinanced through HARP in December were more than 25 percent underwater, according to the FHFA report.

Source: “HARP Surpasses 2012 Estimates on Homeowner Refinances,” Bloomberg News (March 13, 2013)


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