The Federal Housing Finance Agency said Wednesday the Home Affordable Refinancing Program will be extended an additional year, and also announced a new refinancing opportunity specifically for borrowers with high loan-to-value ratios.
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However, even as home prices rise and mortgage rates remain low, FHFA officials say they have struggled to reach out to those remaining borrowers who could benefit from refinancing.
Since the new high LTV streamlined refinance offering will not be available to borrowers until October 2017, the FHFA said it “created a bridge” to ensure that high LTV borrowers who are eligible for HARP will not be without a refinance option. Unlike HARP, where borrowers must have had a loan originated before June 2009, the new programs won’t have an eligibility cutoff. So far, more than 3.4 million borrowers have refinanced with HARP. It will be more targeted than HARP, the agency said, and will focus on borrowers whose LTV ratios are higher than the GSEs’ allowable limits. The new program will only be available to those with less than three percent equity in their homes at Fannie Mae, and less than 5 percent at Freddie Mac.
Borrowers can continue to use the Home Affordable Refinance Program, or HARP, though September next year, the Federal Housing Finance Agency, which regulates the mortgage-finance companies, said Thursday.
As of last week, the FHFA said around 323,000 borrowers nationwide were still eligible for HARP who could benefit from refinancing at a lower rate.
“The population of borrowers eligible for this new program is very small – it’s essentially a subset of the current HARP population”, J.P. Morgan analysts wrote in a research note.
In a release, the FHFA said more details would be released about the replacement program in the next several months.
To qualify for this new refinance option, borrowers must have been current on their mortgage payments for the previous six months; must not have missed more than one payment in the previous year; must have a source of income; and must receive a benefit from the refinance such as a reduction in their monthly payment, a lower interest rate or a shorter amortization term. The FHFA reports that 18,310 borrowers refinanced their mortgages through the program from January 1 through June 30 of this year – the lowest participation rate since the second quarter of 2009, when the program was first launched.
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Turns out the Home Affordable Refinance Program (HARP) isn’t sunsetting just yet. “We look forward to working with the FHFA and Fannie Mae to continue providing liquidity in the market and supporting American homeowners”.
