Declining mortgage rates during the fourth quarter fired up refinancings of high LTV loans guaranteed by Fannie Mae and Freddie Mac, according to new Home Affordable Refinancing Program figures released Monday afternoon.
The Federal Housing Finance Agency reported that refinancings of GSE loans with LTVs of 105% to 125% jumped 17% from the third quarter to 90,600 units in the fourth.
The HARP program was launched in April 2009, but servicers have been leery of refinancing borrowers with no equity in their homes.
In October, the GSE regulator mandated changes to the HARP program to reduce buyback risk and generate more refinancings. FHFA also eliminated the 125% LTV cap on HARP refis.
But implementation of those changes (known as HARP 2.0) didn't really start until late December or later. So HARP 2.0 had little, if any impact, on the fourth quarter jump in high LTV refis.
FHFA general counsel Alfred Pollard told a House oversight committee Monday morning that the industry has embraced the HARP 2.0 changes but implementation will continue through the next few months.
"Already, many of the largest lenders are seeing tremendous borrower interest and an increase in HARP volume in upcoming reports is expected," Pollard testified.
FHFA also reported on Monday that HARP refinancings of loans with 80% to 105% LTVs jumped 9% from the third quarter to 931,200 in the fourth.
The HARP program streamlines refinancings by not requiring a mortgage insurance policy. If the borrower has an existing MI policy, it is simply transferred to the newly refinanced loan.
