Servicers refinanced more than 85,000 high LTV loans under the Home Affordable Refinancing Program (HARP) in the third quarter, up nearly 11% from the prior period, according to new figures compiled by the Federal Housing Finance Agency.

To date, servicers have refinanced 928,500 Fannie Mae/Freddie Mac mortgages with loan-to-value ratios above 80% and up to 125% since the HARP initiative was launched in April 2009.
The figure includes 77,500 refinancings for underwater borrowers with LTVs ranging from 105% to 125%. Servicers refinanced 15,070 of those underwater loans in the third quarter.

The GSE regulator recently streamlined the HARP program to provide relief from representation and warranty clauses to allay fears of buyback risk. The first phase of the new HARP 2.0 program went into effect Dec. 1. Regulators are hoping it will lead to more refinancings in the 105% to 125% category.

The new HARP changes are spurring a great deal of interest and activity, according to CoreLogic senior vice president Arlene Hyde. Lenders and servicers are inquiring about data and analytics from CoreLogic to identify loans that are eligible for a HARP 2.0 refinancing, she said.

"There is a lot of incentive," she said for the large GSE servicers to move quickly and defend their portfolios from poachers. The strategies of other seller/servicers are "all over the board," the CoreLogic senior vice president said.

“Some are going after market share," she noted, and will fund refis with LTVs of up to 125%.
But other servicers are taking a more conservative approach to protect themselves from buyback risk on the new loans.

Certain lenders have set refinancing LTV limits at 105% to control risk. And some want lists of borrowers with 80% to 93% LTVs. "If they can't refinance them under the HARP program, they can [turn around] and refinance them under another program," Hyde said.

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