HARP 2.0 changes go unnoticed in December
[Update 1: Adds comment from FHFA]
Fewer underwater homeowners worked through the Home Affordable Refinance Program in December than in any other month in more than a year, despite changes that removed previous barriers.
About 2,700 mortgages with a loan-to-value ratio between 105% and 125% received a HARP refinancing in December, down 47% from November and the lowest since October 2010. All HARP refis fell 36% monthly to 23,000 in December, hitting a low not seen since November 2009.
Total refinancings at Fannie Mae and Freddie Mac rose 5% to 376,000.
The data released by the Federal Housing Finance Agency included no loans with LTV ratios above 125% — now considered eligible. Those changes, dubbed HARP 2.0, took effect at the beginning of December.
Corinne Russell, a spokeswoman for the FHFA, said the agency's data likely won't reflect the changes until it releases numbers for the first quarter of this year. She said it typically takes 60 days to originate and close a loan and another 90 days from closing to loan delivery to Fannie and Freddie.
But with the changes, Russell said the agency is hearing that more lenders are refinancing loans with LTV ratios above 105%.
"Anecdotally, we know that lenders are embracing HARP 2.0, originating loans under the new terms," Russell said in an email.
Analysts previously predicted effects of the changes might not surface until February's data.
HARP refinancings totaled 93,000 in the fourth quarter, bumping up the cumulative total 10% to 1.02 million over the life of the program.
Mortgage servicers closed 19,500 trials through the Home Affordable Modification Program in the fourth quarter, bringing the cumulative total to roughly 400,000. Active HAMP trials ended the fourth quarter at 36,391, down from 42,279 as of Sept. 30.
Short sales and deed-in-lieu deals increased 13% to roughly 35,000 in the fourth quarter, the highest total since the government placed Fannie and Freddie into conservatorship.
Julia Gordon, FHFA manager of single-family policy, said the agency is working to streamline policies in those programs.
"It's not as if there's some enormous gulf between the policies," Gordon said. "Even small differences in policy can create frictions that are not necessary."
Foreclosure starts at the government-sponsored enterprises declined to 218,000 from 224,000 in the third quarter, and mortgages 90-plus days delinquent dipped slight to 3.78% from 3.81% of Fannie and Freddie's portfolio. Florida led states in those delinquencies at 11.5%, followed by Nevada and New Jersey at 8.3% and 6.3%, respectively. (Click map to expand, or visit the FHFA website for an interactive version.)
Fannie and Freddie serviced roughly 29 million single-family mortgages as of the end of 2011, down from 29.7 million a year earlier.