Genworth Financial estimates the recent expansion of loan-to-vaue limits within the Home Affordable Refinance Program (HARP) will qualify an additional 44% of all loans it covers through its mortgage insurance business, and an additional 65% of loans it covers in the hardest-hit states.
Housing regulators raised the loan-to-value (LTV) maximum from 105% to 125% to increase the refinance program’s reach to deeply underwater borrowers with mortgages owned or guaranteed by Fannie Mae and Freddie Mac . Just how many additional borrowers qualified under the new limit remained unclear, with bank analysts estimating a “minimal” impact, with only 6% of agency loans bearing LTVs between 105% and 125%.
But Genworth appears confident in the expansion’s reach among the loans it insures, estimating a total 530,000 loans eligible in all. Soon after the Making Home Affordable Program’s announcement, the company implemented initiatives at its mortgage insurance business that would allow for mortgage insurance modification in concert with the borrower’s refinancing.
Early in the program’s implementation, Genworth estimates its insured mortgages refinanced through HARP saw a 1.5 point interest rate reduction, and an average monthly payment savings of 13.5%.
“Increasing the LTV ceiling for the Home Affordable program will allow us, and others in the industry, to help many more borrowers refinance into a loan they can afford,” said Mark Goldhaber, senior vice president of the Affordable Housing & Government Business Development segment of Genworth’s US mortgage insurance business, in a statement.
“That’s especially important in states that have been hardest hit by home price declines,” Goldhaber added.
The new LTV limit qualifies an additional 65% of loans insured by Genworth in just these states — the so-called “sand states” including Arizona, California, Florida and Nevada — for insurance modification under the program.