By this time, most people involved in the housing industry and mortgage industry have gotten tired of reading or hearing about the HARP refinance program. While we have been flooded with HARP information, there is something to keep in mind. As HARP guidelines improved and the program finally became successful in 2012, it has also played a role in the changing housing market, as well as, the evolving economy.

HARP, the Home Affordable Refinance Program, underwent changes and updates at the end of 2011. These enhancements went into full effect during 2012 and became known as HARP 2.0. The main component of these changes was the removal of loan to value caps and the elimination of an appraisal, in many cases. The HARP program is now somewhat similar to the popular FHA streamline refinance, another successful program which also does not require an appraisal or other documentation. With these changes, severely underwater homeowners are able to refinance to low mortgage rates that offered a substantial savings. Right now, HARP refinancesare only available for borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009.

According to the Federal Housing Finance Agency (FHFA) September Refinance Report, HARP refinances for Fannie Mae and Freddie Mac accounted for approximately one quarter of all refinances during the third quarter of 2012. More than 90,000 homeowners refinanced through HARP products during the month of September alone. Total HARP loans since the beginning of 2012 totaled 709,000. This significant amount of HARP refinances is due to the programs enhancements to include mortgages with loan to values above 125%. HARP numbers also improved once borrowers were able to use any lender to obtain the refinance.

Since the HARP program was introduced in 2009, the FHFA reported that Fannie Mae and Freddie Mac have refinanced over 1.7 million loans through the program. For the month of September alone, half of all HARP refi's had loan to value ratios that fell above 105% and one quarter had loan to values above 125%. Also in September, 19% of HARP refinances were for shorter terms of 15 and 20 year mortgages. In the hard hit states of Nevada, Florida, Arizona and Georgia, HARP accounted for 45% of total refinances in September. Across the remainder of the nation, HARP represented 21% of all mortgage refinances. Underwater mortgages with more than 105% loan to value ratios accounted for more than 70% of HARP volume in Nevada, Arizona and Florida and more than 60% in California.

The success of the HARP program has also helped stabilize the housing market. HARP was developed as a way to give underwater homeowners a way to save money through refinancing which, in effect, reduces defaults. This procedure helped to stabilize the decline of home prices, reduced inventory and helped the overall housing market. According to the National Association of Realtors, home purchase of existing homes rose 5.9% in November and is 26.8% higher than a year ago. The S&P/Case-Shiller Home Price Indices showed an increase for the twelve months ending in October; the 10 City Composite Index Extra rose 3.4% on an annual basis and the 20 City Composite rose 4.3%. These price increases are also raising available equity for many homeowners who may now be able to use traditional refinances instead of one of the special programs for underwater borrowers.

When consumers are able to save in one area, such as mortgage payments, they tend to spend in another area. Refinancing to better rates or terms can produce a major source of savings for homeowners. Special programs such as HARP loans and the FHA streamline loans have been successful this year and hopefully will reach more homeowners in 2013. There are many homeowners who are still eligible for HARP, but have not yet taken the opportunity offered to them. Available until the end of 2013, it is hoped that all eligible homeowners will be reached while HARP is still an option. Even though the housing market is improving, there are still many homeowners who purchased homes at the height of the housing boom and are still severely underwater.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.

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