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The Latest or ig i nat ion ANALYTICS se r v ic i ng a na ly t ic s HARP Strong Despite Dwindling Refi Volume Though industry professionals may balk at some of the rules that resulted from the crisis, many Americans welcome them. S e c on da r y M a r k e t Voters Favor Increased Financial Regulation Interest rates are having a great impact on the refinance market, but they haven't slowed down HARP. A A s the country marks the fifth anniversary of the 2008 financial meltdown, a poll from the Center for Responsible Lending (CRL) finds consumer support for tough financial regulation and for the Consumer Financial Protection Bureau (CFPB) remains strong. For the survey, CRL and Americans for Financial Reform contracted a research group to poll 1,004 likely voters on their feelings toward Wall Street, reform measures that have already been implemented, and steps that have been proposed. While the issue of financial regulation has been an area of contention in Washington, the survey actually found that the electorate overwhelmingly favors it, with 96 percent of Democrats, 95 percent of Independents, and 89 percent of Republicans saying they believe financial regulation is important. Overall, 83 percent of voters (including 89 percent of Democrats, 82 percent of Independents, and 75 percent of Republicans) said they favor tougher regulation of "Wall Street financial companies" when that statement is put against the alternative that "their practices have changed enough that they don't need further regulation." Meanwhile, 64 percent of voters said they see a need for an agency charged to protect consumers from dangerous financial products (such as CFPB). By contrast, 26 percent agreed with a counter-argument depicting the bureau as an example of expensive and unnecessary federal bureaucracy. Notably, though, 40 percent of respondents said they have no opinion or have not heard of the agency. Nevertheless, after hearing arguments both for and against financial reform, 63 percent of voters agreed that Wall Street should be held accountable and prevented from repeating past actions, and 67 percent held a favorable view of the stepped-up oversight of mortgage brokers and other financial industry players. Latest Jobs Report Leaves Unanswered Questions Some experts wonder how the taper timeline will manifest after the last round of jobs numbers was released. T hough the national unemployment rate continued to fall in August, disappointing payroll numbers over the last several months have analysts wondering what the latest jobs report might mean for the 52 | The M Report Federal Reserve's plan to taper its monthly asset purchases. According to a recent report from the Bureau of Labor Statistics (BLS), non-farm payrolls increased by 169,000 in August, slightly shy of the 180,000 consensus forecast. More s mortgage rates climb, refinances are on the decline. However, refinances through the government's Home Affordable Refinance Program (HARP) remain elevated compared to last year's volumes, according to the Federal Housing Finance Agency's (FHFA) Refinance Report for the second quarter of this year. Mortgage rates rose from 3.57 percent to 4.07 percent over the second quarter, while total refinances completed through Fannie Mae and Freddie Mac fell from about 1.4 million to about 1.3 million, according to the FHFA report. HARP refinances made up about 22 percent of all refis completed during the second quarter, according to FHFA. HARP refinances totaled about 280,000 for the quarter, down from about 290,000 in the first quarter of this year. "This marks the third straight quarter in which HARP refinances have declined, but refinances through the program remain well above average levels prior to program enhancements last year," FHFA stated. Forty-three percent of HARP refinances in the second quarter were for underwater homeowners with loan-to-value ratios of more than 105 percent. Nineteen percent had LTVs greater than 125 percent. Eighteen percent of HARP refinances in the second quarter were for 15- and 20-year mortgages. Year-to-date, HARP refinances account for 21 percent of all refinances nationwide. However, HARP made up a greater share of refinances in some key states, including Nevada (59 percent), Florida (50 percent), Georgia (45 percent), and Michigan (40 percent). Since the initiation of HARP in April 2009, about 2.7 million homeowners have refinanced through the program, according to FHFA. Most HARP refinances have been for primary residents—about 2.3 million. Close to 88,000 have been for second homes, and about 307,000 have been for investment properties. disappointing, however, was the decline in June and July's revised payrolls, which dropped a cumulative 74,000. The declines also brought the latest three-month average to 148,000, the weakest since the same period last year. The six-month average has also experienced a steady decline, according to calculations from Capital Economics. "As it stands now, that average isn't much higher than it was a year ago when the Fed felt it necessary to launch QE3," commented Paul Ashworth, chief U.S. economist for the firm. At the same time, while the unemployment rate now stands almost a full percentage point down from August 2012's 8.1 percent, a large factor behind that decline is the sizable drop in the labor force, which in August fell 312,000. "So the Fed can point to a marked decline in the unemployment rate over the past year, but some of that decline has been achieved because job seekers are giving up and leaving the labor force," Ashworth said, noting that August's participation rate was at a 35-year low of 63.2 percent.

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