Home owners with more that 25% underwater equity in their homes became the biggest beneficiaries of the HARP 2.0 program that went into effect in 2012.
According to a recent article on Bloomber.com, “HARP 2.0 is working,” said Patrick Ahn, a mortgage bond trader at Los Angeles-based TCW Group Inc. “We’ve seen many more borrowers take advantage versus the first version.”
The new version of the Home Ownership Refinance Program (HARP 2.0) helped homeowners in those state worst hit by foreclosures. The so called “sand states,” were so far underwater that the original HARP program could not help them because it capped at 25% negative equity. Again, from the Bloomberg article:
The U.S. housing market is rebounding as foreclosure sales drop after a record number of seized properties had dragged on prices and sapped buyer confidence, said Diane Swonk, chief economist at Mesirow Financial in Chicago. There were 1.1 million HARP refinances in 2012, double the year-earlier number and exceeding FHFA estimates, the agency said in the report. Underwater borrowers, with mortgages that exceed their property values, are most at risk of default, Swonk said.
This additional action in HARP 2.0 lending has helped reduce repossessions by 29% in December to its lowest rate since 2007, according to RealtyTrac. Fewer repossessions have resulted in climbing home prices nearly in every location. This infographic shows the appreciation across the country but also shows a lot left to catch up with where we were.
About the author: Fred Chamberlin is a senior loan officer with Guild Mortgage Company in Oak Harbor. He has been in the mortgage origination business for over 20 years and in the lending business for over 30 and authors a number of mortgage related blogs.