HARP program doubles mortgage refis in 2012

• Federal mortgage refi program helps 2.2 million borrowers since %2709
• HARP borrowers save about %244%2C300 a year%2C Fannie Mae estimates
• Changes last year loosened eligibility requirements

A government program to help struggling homeowners take advantage of low interest rates helped 1.1 million borrowers last year — more than twice as many as in 2011, the government says.

The Home Affordable Refinance Program (HARP), launched in 2009, was revamped in late 2011 to make it more attractive to homeowners and banks doing the refis.

Given those changes, HARP "is finally living up to expectations," says Mark Zandi, chief economist of Moody's Analytics.

Since 2009, almost 2.2 million homeowners have gotten HARP refis, the government says. On average, they're saving about $4,300 a year on home loans, Fannie Mae estimates.

To be eligible, HARP applicants must have loans owned or guaranteed by Freddie Mac or Fannie Mae, have less than 20% equity and be current on payments.

Almost 3 million more borrowers may be eligible for HARP, says Bob Walters, chief economist of Quicken Loans.

He says the biggest problem is that HARP had so many false starts, people don't pursue it, and they "believe it's too good to be true."

HARP was intended to help borrowers refinance even if falling home prices left them with too little home equity to do so, or even left them owing more on loans than their homes were worth.

As HARP changed, more loans became eligible, and lenders got more protection if they refinanced a loan that turned sour.

HARP volume almost doubled in the first quarter of last year after the last changes took hold, according to data from the Federal Housing Finance Agency, the regulator of Freddie Mac and Fannie Mae.

HARP refis — while a small plus for the overall housing market — have been more important for homeowners who couldn't otherwise refinance and access today's historically low interest rates, Zandi says.

In December, 25% of HARP refis were to borrowers who owed at least 25% more on their loans than their homes were worth, the FHFA says.

While getting a HARP refi may require less documentation, HARP borrowers pay more, says Amherst Securities. If a conventional borrower last month got a loan at 3.5%, it would have been 3.79% on average for a HARP borrower, Amherst says.

Still, HARP demand has been strong. HARP refis accounted for 22% of Freddie Mac and Fannie Mae refis in the fourth quarter, FHFA says. That was up from 10% a year earlier. Freddie and Fannie backed 55% of first mortgages as of late last year.

In states especially hard hit by collapsing home values, HARP has been even more prominent.

Nationwide, HARP has accounted for 15% of Freddie and Fannie refis since 2009, FHFA says. In Nevada, that number is 46%. It's above 30% in Arizona, Florida and Michigan.

While HARP has helped 2.2 million, millions of other underwater home loans aren't HARP eligible, Zandi says.

What's more, 45% of the nation's first-lien home loans still have interest rates above 5%, says market researcher CoreLogic. Rates have been below 4% for 16 months, Freddie Mac data show.