Refi and Principal Reduction Programs Gaining Traction
The Obama administration’s refinancing programs are reaching more GSE and FHA borrowers, allowing these troubled mortgagors to take advantage of historically low mortgage rates, according to a new HUD/Treasury Department report.
Enhancements to the Home Affordable Refinancing Program rolled out in February and March allowed almost 500,000 GSE borrowers to refinance their high LTV loans, according to HUD acting assistant secretary Erika Poethig.
These Fannie Mae and Freddie Mac borrowers will save, on average, $2,500 per year on their payments.
The FHA streamline refinancing program launched June 11 attracted “more than 51,000 applications in the first 10 days,” Poethig said.
The Treasury Department also released its monthly report on the Home Affordable Modification Program report late Friday. The report shows that the number of active HAMP modifications with principal reductions jumped 37% from April to 75,200 in May.
Most of the principal reduction mods are the result of the $25 billion robo-signing settlement with the state attorneys general and federal agencies.
Treasury refers to these mods as “non-PRA” principal reductions because they don’t fully comply with the HAMP “principal reduction activity” program.
The HAMP report shows that the five mega-servicers that signed the robo-signing settlement have completed 17,400 mods with principal reductions.
“The terms of the $25 billion settlement of mortgage servicing deficiencies between the five largest servicers, the federal government and 49 state attorneys general have recently caused servicers to increase use of non-PRA principal reductions,” the HAMP report says.