Applications for mortgage refinancing have seen a sharp increase
since new, relaxed guidelines for the Home Affordable Refinance
Program (HARP) were unveiled last fall, the White House announced
last week.
Nationwide, refinancing applications have increased by 50
percent since last fall, with much of it driven by demand for HARP
refinances, according to White House figures. Approximately
one-third of all current mortgage refinance applications are for
HARP loans, according to administration figures, up from one in 10
a year ago.
Mortgage servicers are handling nearly half a million refinance
applications, HUD Secretary Shaun Donovan told the Senate Banking
Committee last week, with a potential average annual savings of
$2,500 per homeowner. By contrast, approximately 1 million
mortgages have been refinanced through HARP since the program was
launched in spring 2009.
Big increases in states with high underwater rates
The biggest increases in refinance demand have come from states
with high rates of underwater homeowners, those owning more on
their home loans than their property is worth. Refinance
applications in Nevada, where 61 percent of mortgage borrowers are
underwater, are up by 267 percent since the new HARP guidelines
were announced last fall.
In Arizona, where nearly half of all mortgages are underwater,
refinance applications have increased by 181 percent since HARP 2.0
was unveiled, according to White House figures, while Florida and
Michigan, which also have high rates of underwater loans, have seen
refinance applications increase by 125 percent since the new
guidelines were introduced.
New rules ease refinancing
The new changes to the HARP program allow borrowers to refinance
no matter how far underwater their mortgage is, replacing the
previous ceiling of a 125 percent loan to value ratio (mortgage
balance 25 percent greater than home value).
Other changes included eliminating the requirement for new
appraisals on many refinance applications, measure to make it
easier to obtain a refinance from a different lender than the one
currently servicing the loan and refinancing fees have been reduced
or eliminated for borrowers looking to shorten the term of their
mortgage.
Although the program changes were initially rolled out last
fall, they were not fully implemented by most lenders until
mid-March, due in large part to the need to upgrade underwriting
software used to process refinance applications.
Although the HARP program is primarily aimed at underwater
borrowers, it can also be used by homeowners with low equity - less
than 20 percent of their home value - to refinance as well. The
program is limited to borrowers with mortgages backed by
Fannie Mae
or
Freddie Mac
, although the administration is asking Congress to enact further
changes that would open the program up to a larger pool of
borrowers.
This article was originally published on MortgageLoan.com at:
http://www.mortgageloan.com/underwater-refinance-without-harp-9073
.