As mortgage rates continued to hit new depths, the number of refinancings completed through the Obama administration’s mortgage refinance program more than doubled year over year in May, according to a monthly report from the Federal Housing Finance Agency.

Last fall, the FHFA, which regulates government-sponsored enterprises Fannie Mae and Freddie Mac, announced several changes to the Home Affordable Refinance Program (HARP) in an effort to boost participation.

The changes included lifting the previous 125 percent loan-to-value (LTV) cap on HARP refinancings, and releasing lenders who sign off on a refinanced loan from some legal liabilities associated with the original loan.

The new HARP guidelines also eliminated some risk-based fees if homeowners refinanced into shorter-term mortgages that would get them out from negative equity situations more quickly.

HARP refinancings rose to 67,456 in May from 25,475 in May 2011. More than two-thirds of those refinancings were to borrowers with LTVs of 80 to 105 percent, meaning they either had equity in their homes or were only slightly "underwater."

But nearly a third of HARP refinancings were granted to borrowers above the 105 percent LTV threshold, meaning they owed considerably more on their mortgage than their home was worth.

The program completed more refinancings of underwater mortgages in the first five months of this year — 78,273 — than in all of 2011 (59,991).

Source: FHFA 

Underwater borrowers also increasingly chose shorter-term 15- and 20-year mortgages: 19 percent chose such mortgages in May, compared with 10 percent in 2011 overall.

Source: FHFA  

HARP refinancings accounted for 20 percent of all refinancings, the greatest proportion since the program’s inception in 2009. Since then, HARP has completed a total of 1.3 million refinancings, or about 11 percent of Fannie Mae and Freddie Mac loans refinanced during that period.

HARP refinancings accounted for more than 40 percent of May refinancings in four states with high foreclosure rates: Nevada, Arizona, Michigan and Florida.

Source: FHFA   

Some foreclosure-ridden states also had high shares of HARP refinancings to underwater borrowers. In Nevada, Arizona, Florida, Idaho and California, underwater borrowers accounted for at least 42 percent of all HARP refinancings in May.

Source: FHFA   

In order to qualify for HARP, loans must be owned or guaranteed by Fannie Mae or Freddie Mac and must have been sold to the GSEs on or before May 31, 2009. Borrowers must have a loan-to-value ratio above 80 percent and must be current on their mortgage payments at the time of the refinance. Borrowers may have had one late payment in the 12 months prior to the refinance, but not in the six months before the refinance. 

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
We're giving away 3 free ICLV tickets at Connect Now next week. Register and attend live for your chance to win!REGISTER×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription