HARP 2.0 Helping More Homeowners To Refinance



The foreclosure crisis played havoc with real estate markets across the nation, yet some markets were clearly worse hit than others. Now, those areas that suffered the most are leading the nation in refinancings as homeowners look to reduced their monthly mortgage payments and hold onto their homes.

© Piotr Marcinski

© Piotr Marcinski

Thanks to an expansion of the government’s Home Affordable Refinance Program (HARP) last year, thousands more underwater homeowners have been able to secure new deals with their banks, allowing them to keep on top of their home loans, reports Bloomberg.

Nevada is a prime example. The state saw home values plummet by more than 50% since the start of the recession, and now leads the country with the highest percentage of mortgage holders signing up for HARP. Nevada saw 68% of all its refinancings made under HARP, according to the Federal Housing Finance Agency (FHFA). Meanwhile, 58% of refinancers in Florida also used HARP.

In total, last year saw more than 1.1 million refinances made under HARP nationwide, twice as much as we saw in 2011.

“The biggest hurdle the housing market has to overcome to stay on its upward trajectory is keeping the foreclosure inventory down,” states economist Diane Swonk of Mesirow Financial.

“HARP refis are keeping people in their homes, especially in the states where property is severely underwater.”

The HARP program was first rolled out in 2009, but its first incarnation saw thousands of homeowners excluded as anyone more than 25% underwater was barred. However, this restriction was removed at the beginning of last year when a revamped “HARP 2.0″ was introduced. In addition, HARP 2.0 allows homeowners to approach any lender for refinancing, not just their existing one.

According to the FHFA, the impact of these changes is fairly significant, with over 25% of new refinancers qualifying after failing to meet the requirements of the original HARP program.