By Mike Colpitts
In the Obama administration’s piece-meal approach to solving the housing market collapse, less than 1-million additional underwater homeowners are expected to receive refinances through the expanded HARP program, according to federal officials.
The announcement by Federal Housing Finance Agency Director Edward DeMarco confirms a Housing Predictor analysis made just a day after the expansion of the program two weeks ago. The announcement was made during a speech before the U.S. House of Representatives Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprise.
“On October 24, we announced a series of changes we are making to the Home Affordable Refinance Program (HARP). These changes should make HARP refinances accessible to more households with mortgages owned or guaranteed by the Enterprises,” DeMarco told the committee.
Changes to the program include eliminating some risk-based fees, removing the current 125% loan-to-value ceiling, waiving representations and warranties, eliminating the need for some property appraisals, carrying over mortgage insurance coverage and extending the end date of the program.
The program is the administration’s effort to reduce the growing volume of foreclosures suffered by homeowners, but “is not a mass refinancing program,” DeMarco said. “Since HARP was introduced in 2009, almost 900,000 homeowners have refinanced through the HARP program. We believe the changes announced may help double the number of homeowners helped through HARP.”
Freddie Mac and Fannie Mae plan to issue guidance with details about the new changes for mortgage lenders and servicers by November 15th.
Since industry participation in HARP is not required of mortgage lenders and banks, implementation schedules will vary as individual lenders, mortgage insurers and financial firms modify their programs.