by Calculated Risk on 3/13/2013 03:23:00 PM

Note: HARP is the program that allows borrowers with loans owned or guaranteed by Fannie Mae or Freddie Mac - and with high loan-to-value (LTV) ratios - to refinance at low rates.  Fannie or Freddie are already responsible for the loan, and allowing the borrower to refinance lowers the default risk.

From the FHFA:

The Federal Housing Finance Agency (FHFA) today released its December 2012 Refinance Report, which shows that with the number of mortgages refinanced through the Home Affordable Refinance Program (HARP) in the fourth quarter, nearly 1.1 million HARP refinances were completed in 2012 and nearly 2.2 million were completed since HARP was implemented in April 2009. The 2012 HARP performance surpassed previous estimates for the program.
...
In December, 25 percent of loans refinanced through HARP had loan-to-value ratios greater than 125 percent.

In December, 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.

Note: the automated system wasn't released until the end of March - and there were some issues with that system - so HARP refinances didn't really pickup until sometime in Q2. This program saw more participation than most analysts expected (I was more optimistic).

These "underwater" borrowers are current (most took out loans 5 to 7 years ago), and they will probably stay current with the lower interest rate.

This table shows the number of HARP refinances by LTV in 2012 compared to 2011. Clearly there was a sharp increase in activity. Note: Here is the December report.

HARP Activity
	2012	2011	Since Inception
Total HARP	1,074,755	438,228	2,165,021
LTV >80% to 105%	605,946	373,093	1,598,978
LTV >105% to 125%	240,665	65,135	337,899
LTV >125%	228,144	0	228,144