A total of 77,000 home refinances under the guidelines of the Obama administration’s Home Affordable Refinance Program were processed in the March ending quarter of 2014, according to figures released by the Federal Housing Finance Agency.
About 370,000 refinances in total were processed in quarter one 2014, but only 21 percent (about 77,000) were under the HARP umbrella. This marked the fourth consecutive quarter where total refinances went down, and a sign that increasing mortgage interest rates have been a significant factor in the slowdown of broader refinance activity.
Be that as it may, HARP participation rates have not satisfied government agencies, as far fewer consumers than expected have taken advantage of the initiative. When HARP was launched in 2009, the FHFA originally predicted that four to five million Americans would sign up for it, but several variables, including mortgage rate hikes and arguably restrictive requirements, have adversely affected consumer participation.
The HARP program was reformatted in light of complaints that it was too hard to qualify for; working closely with Fannie Mae and Freddie Mac, the FHFA identified some key “pain points” that had caused consumers to stay away from HARP. This included the restriction on loan-to-value ratios of greater than 125 percent, and the short 15-month duration of the program.
As such, HARP 2.0 was launched in late 2011, and the program was also extended to December 31, 2015, with the 125 percent LTV cap removed. This had driven an increase in participation, but recent figures have not been too encouraging in terms of consumers taking advantage of HARP’s benefits. Currently, about 750,000 borrowers can theoretically qualify for HARP, but have yet to take advantage of the initiative.