Declining HARP Volume Matches Broader Refinance Trends

Increasing mortgage rates eroded refinancing overall in the third quarter and refinancing through the Home Affordable Refinance Program (HARP) was no exception.  The Federal Housing Finance Agency (FHFA) said today that HARP refinances in the third quarter totaled 203,536, down from 279,933.  This matches the sharp decline in overall refinancing, from 1.28 million to 898,120 loans.  Thus the HARP share of loans refinanced through the two government sponsored enterprises (GSEs) was unchanged from Q2 at 23 percent.

Nonetheless HARP lending fell substantially in every month of the quarter, from 79,000 in July to 68,000 in August, and 56,000 in September although the program's market share also rose each month by one percentage point to 24 percent in September.  As always, the bulk of the HARP loans were purchased or guaranteed by Fannie Mae with a total of 129,971 loans for the quarter compared to 73,565 for Freddie Mac. To date, more than 2.9 million homeowners have refinanced through HARP since the program began in April 2009.

Of the 203,536 HARP loans originated in the third quarter 128,836 had loan-to-value (LTV) ratios between 80 percent and 105 percent (63.3 percent) and those with LTV's exceeding 125 percent numbered 33,583 or 16.5 percent.

HARP continued to account for a substantial portion of total refinance volume in certain states. Through the third quarter, HARP refinances represented 57 percent of total refinances in Nevada and 49 percent of total refinances in Florida, more than double the 22 percent of total refinances nationwide over the same period.  Underwater borrowers were disproportionally represented among HARP refinancers in same states as well.  Year to date through September 2013, underwater borrowers represented 58 percent or more of HARP volume in Nevada, Arizona and Florida.

FHFA said that over the course of HARP's history loans originated for the program have consistently performed better than the loans of people who were eligible to refinance through HARP but chose not to do so.