Inventory
info icon
Single family homes on the market. Updated weekly.Powered by Altos Research
735,718-296
30-yr Fixed Rate30-yr Fixed
info icon
30-Yr. Fixed Conforming. Updated hourly during market hours.
6.94%0.01
Investments

HARP speeds will surge despite broad based burnout

Despite suggestions that specific servicers could eventually face burnout in Home Affordable Refinance Program activity, aggregate refinancing speeds remain elevated, indicating a broad based HARP burnout is unlikely to result in a significant decline in refinancing pacing, said analysts at Bank of America Merrill Lynch

Last month, BofAML suggested that the potential for HARP burnout on JPMorgan Chase (JPM) serviced collateral could be reflected in slower speeds as early as the next three months.

At the current capacity levels, JPMorgan (JPM) can refinance nearly all of their HARP eligible borrowers by September 2013. 

Furthermore,  first quarter of 2013 data showed the volumes of refinancings, in loan counts, slowed for the fastest HARP servicers while increasing as the remaining servicers play catch up.

“Speeds are higher relative to 2012 even for the fastest servicers as the borrower pool has declined, however, the divergence in speeds is a notable trend,” said analysts Satish Mansukhani and Anurag Bhardwaj of BofAML.

However, one exception to this trend is Metlife (MET) where the pace of HARP refis picked up despite the servicer being on the fast side through 2012. This was primarily due to the recent merger with JPMorgan, which is deploying some of its excess capacity to refinance Metlife’s HARP-eligible borrowers, the report noted.

“Absolute reductions in the volume of HARP refinancings at the faster HARP is evidence of excess capacity which will be deployed to non-HARP borrowers in the coming months or toward cross-servicer HARP refinancings,” BofAML analysts explained.

As a result, speeds are unlikely to drop below 30 conditional prepayment rates (CPR) on the HARPable cohorts this year, even under broad based HARP burnout. 

HARP borrowers are also not distributed equally between servicers. 

While some servicers comprise a larger share, the overall pace of HARP activity has remained unchanged since 2012 as speeds on the servicers catching up offset the ones set to slow down.

“We expect that to be the case for much of this year until the borrower pool gets depleted into the year-end,” BofAML analysts concluded.

On a separate, but similar note, analysts of JPMorgan noted that HARPable premiums sped up across all major servicers.

Banking giants including JPMorgan, Wells Fargo (WFC), and BofA saw month-over-month speeds pick up. 

For instance, Citi (C) and BofA HARP speeds increased 2%,  up 49 CPR and 42 CPR, respectively, the report noted.

“Arguably, the one encouraging sign from these numbers is that HARP speeds from most major servicers have peaked or are peaking,” said analysts Brian Ye, Nicholas Maciunas and Jonathan J. Smith of JPMorgan.

Thus, the most significant accelerations are coming from small to mid-tier servicers, moving 11% higher to 46.4 CPR, including SunTrust (STI), Fifth Third Bancorp (FITB) and PNC (PNC)

cmlynski@housingwire.com

Most Popular Articles

Latest Articles

Lower mortgage rates attracting more homebuyers 

An often misguided premise I see on social media is that lower mortgage rates are doing nothing for housing demand. That’s ok — very few people are looking at the data without an agenda. However, the point of this tracker is to show you evidence that lower rates have already changed housing data. So, let’s […]

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please