Refinance Report - Second Quarter 2017

REFINANCE REPORT

Second Quarter 2017

FHFA Refinance Report

Second Quarter 2017

Second Quarter 2017 Highlights

Total refinance volume increased in June 2017 as mortgage rates fell in May. Mortgage rates continued to decrease in June: the average interest rate on a 30-year fixed rate mortgage fell to 3.90 percent from 4.01 percent in May.

In the second quarter of 2017:

Borrowers completed 9,707 refinances through HARP, bringing total refinances from the inception of the program to 3,470,804. HARP volume represented 3 percent of total refinance volume. Year to date through June 2017: Borrowers with loan-to-value ratios greater than 105 percent accounted for 19 percent of the volume of HARP loans. Twenty-five 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. HARP refinances represented 6 or more percent of total refinances in Nevada, and Florida, double the 3 percent of total refinances nationwide over the same period.

In June 2017, 6 percent of the loans refinanced through HARP had a loan-to-value ratio greater than 125 percent. Borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program. Nine states and one U.S. territory accounted for over 60 percent of the Nation's HARP eligible loans with a refinance incentive as of March 31, 2017.

Overview and Eligibility of the Home Affordable Refinance Program (HARP)

HARP Overview

HARP was established in 2009 to assist homeowners unable to access a refinance due to a decline in their home value. The inception date of the program was April 1, 2009.

The program is designed to provide these borrowers with an opportunity to refinance by permitting the transfer of existing mortgage insurance to their newly refinanced loan, or by allowing those without mortgage insurance on their previous loan to refinance without obtaining new coverage.

HARP enhancements took effect in 2012 to increase access to the program for responsible borrowers. The program was scheduled to expire on December 31, 2013, and was extended to expire on December 31, 2015. On May 8, 2015, HARP was extended again to expire on December 31, 2016. On August 25, 2016, HARP was extended once more to expire on September 30, 2017. On August 17, 2017, HARP was extended once more to expire on December 31, 2018. HARP Eligibility

Below are the basic HARP eligibility criteria: Loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Loan must have been originated on or before May 31, 2009. Current loan-to-value ratio -- LTV -- (outstanding mortgage balance/home value) must be greater than 80 percent. There is no LTV ceiling. Borrower must be current on their mortgage payments at the time of the refinance. Payment history ? borrower is allowed one late payment in the past 12 months, as long as it did not occur in the 6 months prior to the refinance.

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FHFA Refinance Report

Second Quarter 2017

Total refinance volume increased in June 2017 as mortgage rates fell in May. Mortgage rates continued to decrease in June: the average interest rate on a 30-year fixed rate mortgage fell to 3.90 percent from 4.01 percent in May.

Mortgage Rates vs Refinance Volume

ABC D

6.48

EF

G HI

J K L MN

600,000 500,000 400,000 300,000 200,000 100,000

6.04 5.29

5.42 5.06 4.97 4.71 4.84

5.00

4.93 4.74 4.35

4.51

4.11 3.96

3.95

4.07

3.47 3.57

3.68 3.35

4.49

4.46 4.16

4.34 4.16

3.98 3.86 3.96

4.20 3.57

3.89 3.69 3.46

4.20

Average Interest Rate on a 30- Year Mortgage 3.90

Number of Mortgages Refinanced by Fannie Mae and Freddie Mac

0

* Mortgage rates are from the Freddie Mac Primary Mortgage Market Survey, monthly average, from the Freddie Mac website.

2008

2009

2010

2011

2012

2013

2014

2015

2016 Jun

Source: FHFA (Fannie Mae and Freddie Mac)

2017

A - Highest rate in 2008 for a 30-year mortgage. B - GSEs placed into conservatorship on 09/06/08. C - Fed announces MBS purchase program on 11/25/08. D - Treasury rates sharply rose and reached a 2009 high

on a better than expected June unemployment report. E - 30-year mortgage rates reached 4.17 percent in early November, marking the lowest level observed since Freddie Mac began tracking rates in 1971. F - Treasury rates fell amid ongoing concerns of a growing debt crisis in Europe.

G - 30-year mortgage rates reached new historic lows in November 2012.

H - Mortgage rates rose after Federal Reserve Chairman Bernanke stated in late May that the central bank was considering slowing its $85 billion per month bond buying program known as quantitative easing.

I - Highest rate for a 30-year mortgage since July 2011.

J - 30-year mortgage rates reached a monthly average of 3.67 percent in January, the lowest level seen since mid 2013.

K - 30-year mortgage rates reached a monthly average of 4.05 percent in July 2015, the highest level observed since September 2014, amid expectations of a rate hike by the Federal Reserve.

L - The Federal Reserve raised the target federal funds rate from a range of 0%-0.25% to a range of 0.25%-0.5% on 12/16/15 in response to a strengthening economy.

M - Treasury rates fell, amid a global flight to the safety of government debt, in response to uncertainty in the financial markets driven by the U.K. Brexit vote to leave the European Union.

N - The Federal Reserve raised the target federal

funds rate from a range of 0.25%-0.5% to a

range of 0.5%-0.75% on 12/14/16 in response

to a strengthening economy.

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FHFA Refinance Report

Second Quarter 2017

In the second quarter of 2017, 9,707 refinances were completed through HARP, bringing total refinances through HARP from the inception1 of the program to 3,470,804.

Refinances Through June 2017

Total Refinances Fannie Mae Freddie Mac Total

1Q17

302,683 207,391 510,074

2Q17

222,453 134,256 356,709

2016

1,401,124 924,547

2,325,671

2015

1,187,887 897,049

2,084,936

Total HARP Fannie Mae Freddie Mac Total

HARP LTV >80% -105% Fannie Mae Freddie Mac Total

HARP LTV >105% -125% Fannie Mae Freddie Mac Total

HARP LTV >125% Fannie Mae Freddie Mac Total

All Other Streamlined Refis Fannie Mae Freddie Mac

Total

8,260 5,165 13,425

6,775 4,063 10,838

1,019 786

1,805

466 316 782

24,393 14,713 39,106

5,968 3,739 9,707

4,951 2,875 7,826

730 592 1,322

287 272 559

17,962 10,787 28,749

41,819 25,296 67,115

33,695 19,566 53,261

5,592 3,931 9,523

2,532 1,799 4,331

99,439 60,353 159,792

65,562 44,549 110,111

50,962 33,224 84,186

9,596 7,559 17,155

5,004 3,766 8,770

132,566 85,677

218,243

1 Inception - April 1, 2009 Source: FHFA (Fannie Mae and Freddie Mac)

Inception to Date

15,771,910 9,914,517

25,686,427

2,054,837 1,415,967 3,470,804

1,465,881 977,281

2,443,162

330,930 262,527 593,457

258,026 176,159 434,185

2,501,899 1,465,236 3,967,135

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FHFA Refinance Report

Second Quarter 2017

In the second quarter of 2017, 9,707 loans were refinanced through HARP, representing 3 percent of total refinance volume during the quarter.

HARP Refinance, Quarterly Volume

(Number of loans in thousands)

319

300

297294

280

264

250

122 112113

111

200

195115

204

150

74

150

139

85

100 50 0

Percent

31

14 17

88 40 48

1059410672 78 47 41 50 32

46 58 53 56 77

66 74

49061309114002109149197185182169130141353707

56 61 62

72 47

54 21 33

44 16

28

37 15

22

32 13

19

32 26 13 10 19 15

21 8 13

20 8 12

18 171

16 6 10

13 85

13 85

10

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 17

of Total 2% 8% 11%14%15%12%11%14%17%16%10%17%27%26%22%21%22%23%23%21%16%11% 9% 6% 5% 5% 5% 5% 4% 2% 2% 3% 3% Refinances

3 3 3 Freddie Mac Fannie Mae

Apr May Jun 17 17 17

3% 3% 2%

S. ource: FHFA (Fannie Mae and Freddie Mac)

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FHFA Refinance Report

Second Quarter 2017

From inception1 through June 2017, 2,901,149 loans refinanced through HARP were for primary residences, 110,162 were for second homes and 459,493 were for investment properties.

1Inception - April 1, 2009

HARP Loans by Property Type Inception through June 2017

Total

Total HARP Fannie Mae Freddie Mac Total

HARP LTV >80% -105% Fannie Mae Freddie Mac Total

HARP LTV >105% -125% Fannie Mae Freddie Mac Total

HARP LTV >125% Fannie Mae Freddie Mac

Total

2,054,837 1,415,967 3,470,804

1,465,881 977,281

2,443,162

330,930 262,527 593,457

258,026 176,159 434,185

Source: FHFA (Fannie Mae and Freddie Mac)

Primary Residence

1,695,086 1,206,063 2,901,149

1,234,067 850,625

2,084,692

266,013 218,035 484,048

195,006 137,403 332,409

Second Investment Home Property

61,910 48,252 110,162

45,049 31,522 76,571

8,859 9,106 17,965

8,002 7,624 15,626

297,841 161,652 459,493

186,765 95,134

281,899

56,058 35,386 91,444

55,018 31,132 86,150

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FHFA Refinance Report

Second Quarter 2017

In June 2017, 6 percent of the loans refinanced through HARP had a loan-to-value ratio greater than 125 percent.

140,000 120,000 100,000

80,000

Monthly HARP Volume by Loan-to-Value Ratio

HARP LTV >80%-105% HARP LTV >105%-125% HARP LTV >125%

60,000

40,000

20,000

0 Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun 1Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 2017

1 The number of completed HARP refinances reported for deeply underwater borrowers increased sharply in June 2012 as further enhancements to HARP went into effect. Starting June 1, 2012, lenders became able to deliver loans with loan-to-value ratios greater than 125 percent refinanced through HARP to the Enterprises to be securitized.

Source: FHFA (Fannie Mae and Freddie Mac)

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FHFA Refinance Report

Second Quarter 2017

Year to date through June 2017, borrowers with loan-to-value ratios greater than 105 percent accounted for 19 percent of the volume of HARP loans. The proportion of HARP refinances for underwater borrowers (LTV greater than 105 percent) refinancing to shorter term mortgages accounted for 25 percent. Shorter term 15and 20-year mortgages build equity faster than traditional 30-year mortgages.

100%

Percentage of HARP Refinances by Loan-to-Value Ratio

Mortgage Term of HARP Refinances of Underwater Borrowers (LTV Greater than 105%)

100%

80% 60%

56% 60%

LTV 80%-105%

73% 76% 79% 81%

91%

40%

80%

60%

82% 80% 75% 72% 73% 75% 30-year2

91%

40%

20%

44% 40%

0% 9%

27% 24% 21% 19% LTV >105%1

InceIpntcioenp Full Full Full Full Full Year to

to D-teiocn Year Year Year Year Year Date

201t1o 2012 2013 2014 2015 2016 2017

Dec

1 I2n0cl1u1des HARP LTV >105%-125% and HARP LTV >125%.

Source: FHFA (Fannie Mae and Freddie Mac)

20%

0%

9%

18% 20% 25%

28% 27%

25%

15- and 20-year

InceInpctieopn Full Full Full Full Full Year to

to D-tieocn Year Year Year Year Year Date

201to1 2012 2013 2014 2015 2016 2017

Dec

2 Inc2l0ud1e1s 25-year and 40-year mortgages.

Source: FHFA (Fannie Mae and Freddie Mac)

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