HARP Refinances See Record Activity in June: FHFA

HARP-assisted refinances drove record refinance activity in the month of June, the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ revealed Tuesday.

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The agency released its Refinance Report for June 2012, showing that refinance volume remained strong in June as mortgage rates fell to all-time lows. An estimated 33 percent of refinance volume was done through HARP, the highest percentage since HARP's inception.

The report revealed that at the end of June, Freddie Mac and Fannie Mae had refinanced 422,969 loans through HARP in 2012, more than the estimated total of 400,000 for all of 2011. This brings the total number of HARP refinances by the GSEs to 1.4 million.

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In addition to record-low mortgage rates, FHFA attributed the increased HARP volume to enhancements made to the program in late-2011. The newly-enhanced program, called HARP 2.0, removes the loan-to-value (LTV) ceiling for borrowers refinancing into fixed-rate loans and eliminates or lowers fees for some borrowers.

HARP refinances for loans with LTV ratios greater than 125 percent sharply increased in June, making up more than 40 percent of total HARP volume. Lenders began selling Fannie Mae and Freddie Mac securities containing these loans starting June 1.

Additionally, data showed that more than two-thirds of borrowers in Nevada, Arizona, and Florida-the states hit hardest by the housing downturn-refinanced through HARP in June, compared to 33 percent nationwide.

Underwater borrowers (those with LTV ratios greater than 105 percent) made up 62 percent of HARP volume in June, a 32 percent increase from May. These borrowers made up more than 80 percent of HARP volume in Arizona, Florida, and Nevada. In Idaho and California, they represented more than 70 percent of HARP refinances.

An estimated 18 percent of underwater borrowers nationwide opted for the shorter 15- and 20-year mortgages, a slight drop from 19 percent in May. Shorter mortgages build equity faster than traditional 30-year mortgages.