The total number of loans refinanced through the Home Affordable Refinance Program  (HARP) to an unexpected turn downward in the third quarter.
According to the Federal Housing Finance Agency (FHFA) third quarter Refinance Report , a total of 25,824 HARP refinances were completed between July and September, down from the 31,561 refinances completed from April to June. In addition, HARP volume accounted for 5 percent of total refinance volume in the third quarter.
The FHFA reported that over 3.3 million borrowers have refinanced through the HARP program, which was enacted in 2009 to help homeowners that are not able to refinance due to falling home values.
The Agency approximates that over 429,000 borrowers nationwide have a financial incentive to use the HARP program but still have not.
HARP refinances were highest in Florida, California, Illinois, Michigan, and Georgia, the FHFA stated.
The report showed that Florida, Ohio, Illinois, Michigan, and Georgia are the top five states with the most "in the money" borrowers that are able to use HARP. These borrowers could save an average of $200 per month on mortgage payments.
FHFA deems borrowers to be "in the money" if they meet HARP eligibility requirements, have a mortgage balance of $50,000 or more, have a remaining mortgage of no more than ten years, and an interest rate at least 1.5 percent higher than current market rates.
"FHFA is continuing its efforts to reach HARP-eligible borrowers and has held town-hall style events with local community leaders in Chicago, Atlanta, Detroit, Miami, Newark and Phoenix to get the word out about HARP," the report stated.
Those who refinance using HARP are typically have a lower delinquency rate compared to those who are eligible for the program but choose not to use it, the FHFA says.
Of all HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent), 28 percent resulted in 15-and 20-year mortgages. The FHFA noted that this method helps build equity for borrowers quicker than 30-year mortgages.
The FHFA cautioned potential refinancers that "HARP will sunset on December 31, 2016."
Click here to view the full report.