Tuesday, December 11, 2012

Harp 2 is Humming Along.

The Home Affordable Refinance Program was launched in early-2009. It was meant to give homeowners whose homes had lost value access to the same low rates as everyone else. The recession had started, mortgage rates had been dropping, and the government wanted to use HARP as economic stimulus.

As homeowners refinanced in California, Arizona, Florida and Michigan, among other states, monthly mortgage payments were reduced, helping households to save or spend to meet other financial needs.
The original HARP program, however, failed to gain much traction because of loan-to-value (LTV) restrictions and far-reaching default liability which was placed on banks making HARP loans.

So, to help broaden HARP's base, the program was re-written and relaunched in October 2011. "HARP 2", as the program is commonly called, was meant to expand the reach of the Home Affordable Refinance Program and it has. Prior to HARP 2, the refinance program was reaching fewer than 30,000 households monthly, tallying fewer than one million closed loans through its first 30 months. Since March 2012, the Home Affordable Refinance Program has nearly tripled its volume, closing 87,000 loans per month, on average.

More than 1,000,000 HARP loans are expected for 2012. While HARP 2 is considered a success, the program likely to fall short of its original goal to help 7,000,000 U.S. households. This is just one reason why Congress has considered launching HARP 3. More details can be found in Dan Green's Mortgage Report.

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