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Large Servicer Sees Uptick in HARP Refinancings

JUN 3, 2014 1:55pm ET
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A drop in mortgage rates has boosted Home Affordable Refinance Program refinancings, according to nonbank servicer Walter Investment Management Corp.

"We definitely have seen a pretty sufficient lift in April and May in our HARP origination business," said Denmar Dixon, the servicer's chief investment officer, at a Keefe, Bruyette & Woods conference on Tuesday.

The Tampa, Fla.-based mortgage servicer completed 63,000 HARP refis in 2013 and 14,000 in the first quarter. Walter Investment is Fannie Mae's top HARP originator.

Due to its large holdings of Fannie and Freddie Mac mortgage servicing rights, WIMC estimates that it has more than 375,000 HARP-eligible borrowers in its portfolio.

Overall, HARP refinancings have declined for six straight quarters, according to Federal Housing Finance Agency data. This drop-off is largely blamed on rising interest rates and the success of the multiyear program that has refinanced 3.1 million homeowners with high loan-to-value loans. The latest FHFA report shows lenders and servicers completed just 76,900 HARP refis in the first quarter, down from 294,300 a year ago.

Walter Investment executives expect their HARP business will remain elevated, however. "We feel very good about this year and next year," Dixon said.

The FHFA is also retargeting the FHFA's HARP outreach campaign that was launched last fall. The FHFA estimates that 750,000 underwater borrowers could still qualify for a HARP refinancing and lower their monthly payments before the program expires at the end of 2015.

"We are exploring outreach efforts designed to gain the trust of these 'in-the-money' borrowers so they act in their own financial interest," FHFA Director Mel Watt said in a May 13 speech.

FHFA officials have not provided any details about this retargeting effort since the speech.

Looking ahead, WIMC executives said they realize they must build their origination business as their HARP business tails off.

"We are already increasing our correspondent business," Dixon said, and WIMC is looking at building a retail "boots on the ground" channel.

"We are planning on doing it on an organic basis," the CIO told the KBW audience. Walter Investment is "not looking for growth through acquisitions. But we will keep our eyes open."

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