Underwater Refinancing with the Home Affordable Refinance
ByThe National Mortgage News released a report today that indicated that the underwater mortgage programs is showing signs of life, as homeowners who owe more on their mortgage than their homes have been successfully refinancing. It’s always challenging for lenders to approve mortgage refinancing for borrowers who have a negative equity. According to the Federal Housing Finance Agency report, Freddie Mac and Fannie Mae approved nearly 3.6 million refinance loans in 2010 with 11%. The report revealed that the mortgage refinance volume was directly connected to the 125% loan program endorsed by the Home Affordable Refinance Program (HARP). In 2010, GSEs confirmed a significant increase in home mortgage refinancing with 1.37 million refinance loans closed. 38% of the high LTV loans funded in the fourth quarter.
The Home Affordable Refinance Program Offers a Solution with No Equity Refinancing
The latest FHFA report indicates a major increase in the fourth quarter for high loan to value refinance loans under the HARP program. This home refinancing relief program was created to offer high LTV refinance loans that the GSEs already guarantee. Unlike FHA loans, with the Home Affordable Refinance Program, borrowers are not required to pay for monthly mortgage insurance. In the last few years, no equity refinance options have been difficult to find, but the FHFA reveals that the high LTV loan program works as thousands of distressed homeowners were finally able to refinance their home, even though they were underwater.
| Watch this video about the Home Affordable Refinance httpv://www.youtube.com/watch?v=chv99f6pXL8 |
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In the fourth quarter, the GSEs completed 131,150 refinance transactions of conventional mortgages with loan to value ratios up to 105%. In 2010, Fannie Mae and Freddie Mac closed close to 403,000 100% refinance transactions. The HARP program also allows the enterprises to refinance loans with LTVs above 105%, up to 125%. Fannie and Freddie completed 28,700 underwater refinance loans of these underwater loans last year, including 10,800 in the final quarter. Since the Home Mortgage Refinance program was launched in the spring of 2009, lenders have closed 30,600 refinance loans in the 105% to 125% range.
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