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Yes, and no

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The game has to be changed to bring back private label capital
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Refinancing Accounts for 80% of Loan Activity over Last 2 Months: Nothaft

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Over the last two months, refinancing activity has accounted for more than 80% of all conventional loan activity, said Frank Nothaft, chief economist at Freddie Mac. In a Featured Perspectives report out Monday, Nothaft said Freddie Mac and Fannie Mae have purchased 1.4m refinance loans, including nearly 200,000 loans that have gone through the Home Affordable Refinance Program (HARP). According to Nothaft, these homeowners trimmed an average one-percentage point from their interest rate. The refinanced mortgage payments have been reduced by more than $2.5bn over the first year of those new loans. "By increasing the amount of disposable cash available for savings or consumption purposes, the ability to refinance provides a direct boost to household finances," Nothaft said. The US Department of Housing and Urban Development (HUD) will launch the FHA Short Refinancing program Sept. 7 in the hopes of getting more borrowers out of negative equity. But there are some secondary limitations, including one on the servicers that are trying to get clearance from investors to write down current loans. Borrowers have to be current to qualify for the program. But most refinancing and traditional loans are being funded through Fannie and Freddie. Three out of every five single-family loans were financed directly by the two companies, Nothaft said. He added that economic growth is "likely to continue" for the rest of the year, and said there was a possible uptick in the unemployment rate to come. As for housing markets, local ones are at or near bottom, he said, with some already showing signs of improvement. "And 2011 is likely to bring better prospects for sales, construction and home values, with financing continuing to be supported by Freddie Mac, Fannie Mae, and Ginnie Mae," Nothaft said. Write to Jon Prior.

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