HARP 2 Refinance Loans Surged Since Beginning of Year

The number of mortgage refinance loans originated through the Home Affordable Refinance Program (HARP) has nearly doubled since the program was revised and rolled out as HARP 2 earlier this year.

According to the Federal Housing Finance Agency’s (FHFA’s) March 2012 Refinance Report, the number of mortgage refinance loans leveled off at 180,000 in the first quarter of 2012. That number is near double that of the 93,000 mortgage refinance loans that were recorded in the fourth quarter of 2011.

HARP 2 has been so successful that one in seven refinances made during the first quarter of 2012 were through the HARP 2 program.

Many experts attribute this huge spike in mortgage refinance loans to the fact that HARP 2 did away with the strict prerequisites that applicants needed in order to qualify for the original HARP program. The most notable qualification that was removed was the loan-to-value (LTV) ceiling of 125 percent.

A borrower’s LTV refers to the outstanding balance of a mortgage loan when compared to their property’s current appraised value. If a property’s value exceeds the remaining balance, then a borrower’s LTV will be above 100 percent.

When the housing market collapsed in 2008, millions of homeowner’s saw their LTVs shoot into the triple digits. The government rolled out HARP in order to help alleviate this epidemic of high LTV ratios, but few who suffered an LTV hit had a ratio of less than 125 percent.

HARP 2 no longer has an LTV ceiling of any type for fixed-rate mortgages.

Andrew BonSalle, the senior vice president of Fannie Mae, told the New York Times that he believes HARP 2 could be an even greater success, but that a large portion of the public doesn't even know about these relaxed requirements.

“There’s a lot of borrowers who don’t believe they’re eligible,” said BonSalle.

For those who are aware of HARP 2, but are struggling with determining whether or not now is the time to apply for a mortgage refinance loan, Kevin Watters, senior vice president and head of mortgage originations at JPMorgan Chase, has some advice.

“Homeowners should refinance while interest rates are still low,” he told the NY Times.

Interest rates have been breaking records for all but one of the past eight weeks.