Ad Campaign May Come Too Late to Boost Harp Volume

It may be too late for a new advertising campaign to drum up another wave of refinancings by underwater borrowers with Fannie Mae and Freddie Mac loans.

The Federal Housing Finance Agency said in September that the campaign would feature the star of HGTV’s "Power Broker" show, Mike Aubrey.

The ads began running in some local markets in the last couple of weeks. The campaign will start on national networks later this month, according to FHFA spokesperson Corrine Russell.

The campaign includes public service announcements and outreach efforts by mortgage companies that are both meant to encourage more borrowers to take advantage of the Home Affordable Refinance Program, which has succeeded in refinancing 3 million borrowers since 2009.

"We are hopeful that the PSAs and other elements of the education campaign will reach more homeowners who are current but underwater on their mortgage and may not be fully aware of how Harp can help them get more affordable terms on their loan," Russell said.

However, the latest data show that Harp refinancings declined in November for the fifth consecutive month. Just 38,732 Harp refis were completed in November, down 16.5% from the prior month and down 70% from November 2012.

One expert believes it will be hard for the Harp program to get a second wind. Urban Institute senior fellow Laurie Goodman says borrowers that didn’t take advantage of Harp when interest rates were at 3.5% are unlikely to refinance at 4.5%.

Goodman, a former managing director at Amherst Securities Group, also noted that there is a lot of inertia among borrowers that have not refinanced. The Urban Institute estimates there are 872,400 homeowners that are current on their mortgage and could still benefit from a Harp refinancing. But lenders will be lucky to get a significant portion of that pool to refinance.

Refinancings "have tailed off because of burnout and higher rates. The basic trend is in place," Goodman said.

Since 2009, lenders and servicers have refinanced 18.7 million government-sponsored enterprise loans, including 3 million loans refinanced through Harp. "This program by all standards has been a huge success," Goodman said.

The Harp program got off to a slow start in 2009.  In late 2011, FHFA streamlined the program and it took off.

Last April, the GSE regulator extended the Harp program to December 31, 2015. Lenders and servicers will have nearly two more years to refinance GSE borrowers with loan-to-value ratios above 80%.

Loans refinanced through the program in November included 7,610 for borrowers with LTVs between 105% and 125%, and 5,430 for borrowers with LTVs above 125%.

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