Total refinances through completed through Freddie Mac and Fannie Mae (the GSEs) in the second quarter topped 344,000. The Federal Housing Finance Agency (FHFA) said that Fannie Mae accounted for 211,825 and Freddie Mac 132,688 of the transactions. Since 2009, the first full year they were in federal conservatorship under FHFA, the two GSEs have refinanced the mortgages of more than 19.5 million homeowners.
The percentage of these GSE loans which were refinanced through the Home Affordable Refinance Program (HARP) dropped to 16 percent during the quarter. This marked the first time the HARP share of refinancing had dropped below 20 percent since the first quarter of 2012, about the time HARP guidelines were changed to remove the cap on loan to value ratios. HARP loans had a 21 percent market share in the first quarter of 2013 and a 22 percent share in the second quarter of 2013.
A total of 54,041 loans were refinanced through HARP during the quarter, bringing the total to 3.1 million since the program began. Fannie Mae refinanced about 1.88 million of those loans and Freddie Mac just over 1.3 million. Primarily residences were the target of 2.6 million of the transactions.
FHFA estimates that as of the first quarter of this year there were over 800,000 borrowers who appear eligible for and who could benefit financially from a HARP refinance but who have not yet utilized the program. Nationwide, these borrowers could save an average of almost $2,300 per year on their mortgages.
The number of completed HARP refinances reported for deeply underwater borrowers continued to represent a significant portion of total HARP volume. In June 2014, 9 percent of the loans refinanced through HARP had a loan-to-value ratio greater than 125 percent.
Some states have much higher rates of HARP refinance than others. In Georgia, for example, 37 percent of refinances in the second quarter were through HARP and in Florida 35 percent. Michigan, Illinois, and Nevada are also well above the national HARP average.
Borrowers who have refinanced through HARP have a lower delinquency rate than those borrowers who are eligible but who have not refinanced through the program.
More than 25 percent of all HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent) were for 15- and 20-year mortgages through the second quarter. HARP provides an incentive for borrowers to choose a shorter term loan when refinancing through the program.
FHFA continues to reach out to borrowers who could benefit from the HARP program. It recently held town-hall style events in Chicago and Atlanta to share information about the program with civic leaders.