“Why Aren’t More HARP Loans Closing?”

The HARP program isn’t asking the lender to take a principal reduction, just an interest rate reduction. The majority of these homeowners have paid their mortgage on time, but their real estate values dropped. These homeowners didn’t cause the values of their homes to drop and they want to continue owning the properties. Why make this refinance process as difficult as it is? If these folks obtain an interest rate that drops, they have more dollars to spend every month, that will help the overall economy.

Right now, I am getting 7 out of 10 transactions closed. I am being told by the lenders that that is a great ratio. Why is that a great ratio? Let’s make the process easier for these homeowners.

HARP Means Savings, Less Debt for Homeowners: Freddie Mac

By: Ryan Schuette 05/11/2012

More homeowners continue to reap benefits from the newly modified Home Affordable Refinance Program (HARP), with 79 percent of homeowners with government-backed mortgages either keeping the same level of mortgage debt as before or reducing it over the first quarter.

Of those homeowners, Freddie Mac found recently, 79 percent held onto the same level of debt for first-lien home mortgages, while 21 percent of homeowners shaved off dollars from their principal balance.

The mortgage company said that the share of borrowers keeping their original loan amounts hovered at the highest level in the 26-year history of the survey.

“The enhancements to HARP announced in October, such as removing the maximum loan-to-value limit, are beginning to show up in additional refinance

volume during the first quarter,” Frank Nothaft, VP and chief economist with Freddie Mac, said in a statement.

He said that HARP loans amounted to 20 percent of Freddie Mac’s refinance funding during the first quarter, with borrowers drawing down their interest rates by 1.5 percent on average.

“On a $200,000 loan, that translates into saving about $2,900 in interest during the next 12 months,” he added.

Freddie Mac also found that “cash-out” borrowers – those who increased their loan balances by at least 5 percent – accounted for 21 percent of refinance mortgages.

For those who reduced their 30-year loans, the median interest rate reduction amounted to 1.5 percent, representing roughly 27 percent in savings on interest rates alone, the largest such share in 27 years for Freddie.

Net dollars of convertible home equity translated to an inflation-adjusted low, a bottom for the company in about 17 years of analysis. Refinancing homeowners cashed out with about $5.3 billion in net home equity during the first quarter, down from $7 billion in the fourth quarter.

The latest numbers arrive as the Obama administration and lawmakers considers new modifications to HARP, with the president set to address the issue with a Nevada family interested in refinancing.

HUD Secretary Shaun Donovan indicated in a teleconference call with reporters Friday that the administration stands ready to back one of three bills currently before Congress that would expand HARP.”

 image: stuart miles/freedigitalphotos.net