HARP 2.0 more effective than previous version

The Home Affordable Refinance Program (HARP) underwent some significant changes in 2012, evolving into HARP 2.0 and spurring a surge in refinances under the government-run program. Based on the Federal Housing Finance Agency’s (FHFA) 2012 report, HARP volume represented 22 percent of the total refinance volume in the fourth quarter. Additionally, 1,074,755 refinances were completed through HARP in 2012, bringing the total number of HARP refinances to over 2.1 million since the program’s inception.

So what specific changes attributed to the growth in HARP refinances? HARP 2.0 gives better access to borrowers who are at risk of losing their homes, particularly those who are severely underwater, reports Ilyce Glink of CBS MoneyWatch. Meg Burns, senior associate director for housing and regulatory policy for the FHFA, wrote in an email that “removing the 125 percent loan-to-value ceiling, waiving certain representations and warranties for lenders, eliminating the need for a new property appraisal and eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages has proven successful.”

According to CBS MoneyWatch, HARP 2.0 appeals to more lenders in part because the program does not hold the new originator responsible for anything that occurred with the first loan. “The limited success of HARP 1.0 can be attributed to a lack of lenders that embraced the program,” said Spencer Llewellyn, executive director of Loans 101, a company that provides data to the public about the mortgage industry.

As a result of the revamp, the market has seen a 600 percent annual increase in the number of underwater homeowners who received HARP loans.To find out what HARP 2.0 can do for you, check outwww.makinghomeaffordable.gov.