Compass Point Housing Policy Update: FHFA Released May 2012 Refinancing Report

July 16, 2012 1:18 PM EDT
Compass Point Housing Policy Update

Analysts, Isaac Boltansky and Jason Stewart, said, "The Federal Housing Finance Agency (FHFA) released its May 2012 Refinancing Report this morning. That report shows that HARP 2.0 continues to post strong results through May. There were 67,456 HARP refinancings in May, up from 49,453 in April 2012. The impacts of the HARP 2.0 changes are evident. For the first five months of 2012, about 300 thousand borrowers refinanced through HARP. This compares to only about 185 thousand for the first five months of 2011. Refinancings for borrowers with LTVs between 80% and 105% continue to dominate the program – comprising 68% of the refinancings in May. Borrowers with LTVs between 105% and 125% were 28% of the HARP volume in May. Seriously underwater borrowers, those with LTVs above 125%, were only 4% of the total volume."

"The changes to the program announced last fall have, clearly, had an impact. We remain concerned, however, that there are still major operation hurdles within the program that will ultimately limit its effectiveness. Specifically, we remain concerned that there is a significant difference between the terms and conditions associated with refinancing using the borrower's existing servicer versus a new servicer. We continue to expect operational concerns to ultimately limit the potential impact of HARP 2.0, but the program will likely continue to experience increased volumes in the near-term as it pulls forward potential borrowers. To date, the HARP has helped 1.3 million borrowers as comparred to the original estimate for 4 to 5 million borrowers."

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