1Q 2012 Shows close to double Harp Refinance Activity

By Liz Clinger Updated on 6/4/2012

According to FHFA data, close to 180,000 GSE loans were refinanced in the first quarter of 2012. This is almost double the 93,000 from the fourth quarter of 2011. This is highly due to the large banks launching the expanded HARP program.

When HARP was launched in April of 2009, up-front fees and restrictions such as a cap of 125% LTV and repurchase risk for eligibility caused many severely underwater home owners to be unable to take advantage of the program. HARP then expanded the program in the fall of 2011 to eliminate some of the restrictions, and HARP 2.0 was born, allowing many more homeowners the opportunity to refinance their home loans.

In the first quarter of 2012, over 4,400 borrowers with an LTV over 125% refinanced through HARP, with over half of them located in Arizona, California and Florida. Those in the 105% to 125% range also were more able to take advantage of the HARP refinancing program, and nearly 37,000 did, almost three times 2011’s fourth quarter at 13,000.

Smaller lenders are requesting a removal of the repurchase risk for all lenders, as most of the HARP refinancing business is going to the large banks because of the reduced repurchase risk. Lawmakers have been considering another expansion of the HARP program.