The FHFA recently released its January 2013 Refinance Report, which shows that refinance volume remained high through the first month of this year. There were nearly 470,000 refinances in January, with roughly 97,600 completed through HARP. This brings total HARP refinances to more than 2.2 million since the program’s inception in April 2009.

Highlights from the report include:

• Borrowers in January with loan-to-value ratios greater than 105 percent accounted for 47 percent of the HARP refinance volume.
• The number of completed HARP refinances for deeply underwater borrowers continued to represent a significant portion of total HARP volume. In January, 25 percent of the loans refinanced through HARP had a loan-to-value ratio greater than 125 percent.
• HARP continued to account for a substantial portion of total refinance volume in certain states. In January, 66 percent of total refinances in Nevada and 56 percent of total refinances in Florida were through HARP.
• Also in January, 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.

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CNN Money – It’s typically pretty easy for mortgage brokers to give away money, and indeed, refinancing activity has skyrocketed as interest rates plummeted in recent years. The one group of homeowners who didn’t participate in the refi boom – those whose home prices declined just enough to barely leave enough equity to qualify for refinancing – are now eligible to restructure their loans thanks to a new government program. But mortgage originators have learned it can be surprisingly difficult to persuade some of these homeowners to take advantage of the assistance available.

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In the fourth quarter of 2012, 84 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, according to Freddie Mac. This is just shy of the record 85 percent during the fourth quarter of 2011. Of these borrowers, 46 percent maintained about the same loan amount, and 39 percent of refinancing homeowners reduced their principal balance.

The average interest rate reduction was about 1.8 percentage points, or a savings of about 33 percent in interest rate, the largest percent reduction recorded in the 27 years of analysis.

The net dollars of home equity converted to cash as part of a refinance, adjusted for consumer-price inflation, remained at a low volume. In the fourth quarter, an estimated $8.1 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages, down from an estimated $8.2 billion in the third quarter and substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006.

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In the third quarter of 2012, 29 percent of borrowers who refinanced an existing mortgage chose to shorten their loan term, based on the Freddie Mac Quarterly Product Transition Report released this week.  Refinancing borrowers also preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, according to the report.

More than 95 percent of refinancing borrowers chose a fixed-rate loan. Eighty-two percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the third quarter, the highest share since the second quarter of 2010, while the remaining 18 percent chose to refinance back into a hybrid ARM.  

Those borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. One quarter of HARP borrowers shortened their loan term when they refinanced during the third quarter, compared with 31 percent of borrowers who refinanced outside of HARP.

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Sacramento Bee – A reworked federal effort called the Home Affordable Refinance Program, or HARP, is helping thousands more refinance, even if they’re deeply underwater on their mortgages.

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The FHFA recently released its August Refinance Report, which shows that Fannie Mae and Freddie Mac loans refinanced through HARP accounted for nearly 25 percent of all refinances in August. Nearly 99,000 homeowners refinanced their mortgage in August through HARP, with more than 618,000 loans refinanced since the beginning of this year.

This continues the strong pace of HARP refinancing with the program on target to reach a million borrowers in 2012. The continued high volume of HARP refinances is attributed to record-low mortgage rates and program enhancements announced last year.

Also in the report:

• Since the program’s inception in 2009, Fannie Mae and Freddie Mac have financed more than 1.6 million loans through HARP.
• In August, borrowers with loan-to-value (LTV) ratios greater than 105 percent continued to account for more than half the volume of HARP loans as HARP enhancements were fully implemented in the second quarter of 2012.
• In August, nearly 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which help build equity faster.
• In August, HARP refinances represented nearly half or more of total refinances in states hard-hit by the housing downturn – Nevada, Arizona, and Florida –compared with 24 percent of total refinances nationwide.
• Also in August, HARP refinances for borrowers with LTV ratios greater than 105 percent accounted for more than 70 percent of HARP volume in Nevada, Arizona, and Florida and more than 60 percent of the HARP refinances in Idaho and California.

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Signaling growing confidence in housing, new home-equity revolving lines of credit totaled more than $44 billion year-to-date through July 2012, a three-year high — according to Equifax’s October National Consumer Credit Trends Report. Revolving home equity credit increased 9 percent from the recession low for the same period set in 2010 of $40.6 billion.

In addition, write-off rates among home equity revolving lines fell 1.3 percent in September to 2.15 percent, the lowest level since April 2009.

Other highlights from the most recent data include:

• The number of new revolving home equity lines of credit year-to-date through July 2012 stood at 495,000, a three-year high, though more than 76% lower than the seven-year high of more than 2 million through July 2006.
• Home equity revolving lines of credit fell 20 percent to $537 billion in September 2012 after peaking at $680 billion in May 2009.
• Since November 2007, the total number of home equity revolving accounts has declined more than 34%, from 14.7 million to 11 million in September 2012.

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Mercury News – A Mortgage Bankers Assnociation index of refinance applications jumped 20 percent last week compared with the week before. Applications to purchase homes were up by 4 percent, the trade group said in a weekly survey released Wednesday.
 
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A report by the Credit Union National Association says low interest rates benefit credit unions in the sense that they encourage refinancing, which produces another income stream.
On the other hand, higher-rate mortgages are likely to be prepaid in this low-interest rate environment, causing credit unions to lose loans that produce larger blocks of revenue.

“They will have assets on the books earning 4 percent or 5 percent replaced with loans that may only earn 3 percent,” said Bill Hampel, economist with the Credt Union National Association. “It squeezes their net-interest income immediately.”

The result, Hampel says, is some credit unions will have to sell off a majority of their fixed-rate loans.

The reality is only five-year ARM loans maintained rates that did not hit record lows for the period ending Sept. 27. The 30-year, FRM averaged 3.40 percent the same week, while the 15-year, FRM hit 2.73 percent.

New York Times – One of the best ways for homeowners to cut costs is to refinance their mortgage, but qualifying for a new loan that would lower monthly payments can be difficult for those who are underemployed.

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