The Mortgage Bankers Association (MBA) lowered the bar on its expectations of the mortgage origination industry Monday, narrowing its anticipated '09 origination volume by $700bn to $2.03trn. Contraction of purchase originations accounted for only $84bn of the reduction, while low refinance originations drove the rest of the reduction. The MBA now expects $737bn in purchase originations and $1.3trn in refi originations. The lower refi projection also results from low volumes generated within the Home Affordable Refinance Program (HARP) at Fannie Mae (FNM) and Freddie Mac (FRE). The revisions come after the MBA boosted its forecast by $800bn in March on the heels of the HARP implementation and in the midst of falling interest rates. But when rates began to edge up, the refinance wave began to ebb. “While generally accepted estimates were that around 1.5m to 2m borrowers might avail themselves of this program, with many more potentially eligible, to date only about 13,000 loans have been completed according to press reports," MBA's chief economist Jay Brinkman said in a statement. "While the number of loans completed under this program is likely to increase," he added, "it is difficult to craft a scenario under which origination volumes would come anywhere close to reaching the numbers originally envisioned for the program, particularly under our higher rate environment. " Currently, the HARP allows for borrowers with mortgages up to 105% loan-to-value (LTV) — or 5% more than the current market value of the home — to qualify for refinance. But critics for months have said the LTV limit will not reach the borrowers who need it most — those who purchased more than three years ago, with little money down and when house prices hit a peak. Federal Housing Finance Agency director James Lockhart, in a press conference last week, acknowledged the administration is considering expanding the LTV range to cover borrowers with more than 105% LTV, although he would give no exact figure for the new LTV target. A move toward 125% maximum LTV might increase participation in the program, although investors are still skeptic on how great an effect it would have. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.