Freddie Mac loans that went into the Home Affordable Refinance Program (HARP) following the 2008-2009 financial crisis will continue to outperform loans that did not, according to a new analysis from Moody’s Investor Service
. However, Moody’s added that HARP loans will continue to underperform other loans originated by Freddie Mac after the meltdown period.
The 60-plus day delinquency rate for loans originated in 2005-2007 that went through HARP was 1.14 percent in March 2017, while the rate for loans originated in the same period that did not go through the program was 6.84 percent. “Borrowers who qualified for a HARP refinancing benefited from significant payment reductions under the program,” said Yehudah Forster, Senior Vice President at Moody’s. “This credit strength is borne out in HARP loan performance, with loans originated between 2005 and 2007 that went into HARP having much lower delinquencies than non-HARP loans since 2009.”
But Moody’s also noted that HARP loans will continue to underperform other post-crisis Freddie Mac loans that back credit risk transfer deals because of the government-sponsored enterprise’s tighter underwriting guidelines for the non-HARP post-crisis loans. Indeed, the 60-plus day delinquency rate for HARP loans is higher than that for similar non-HARP Freddie Mac loans.