A HARP IS NOT A HOME
The government's mainstay effort to stabilize housing for the past two years, the Home Affordable Refinance Program (HARP), is under the microscope as federal housing regulators search for ways to expand its reach.
HARP allows borrowers who have loans backed by Fannie Mae and Freddie Mac, and who hold little or no equity, to refinance to take advantage of low interest rates.
The program, rolled out in April 2009, has modified about 838,000 mortgages -- although it was originally intended to help 5 million homeowners avoid foreclosure.
"The administration has not been sufficiently aggressive," said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California, which receives funds from a major residential development company.
"I don't think there's any panacea, but at minimum, they should streamline HARP and make it more effective for those borrowers that are making payments on time."
Mortgage rates are at record lows, yet many U.S. homeowners have been unable to refinance because they owe more than their homes are worth or have less-than-perfect credit.
The current average for a 30-year fixed loan is 4.09 percent, the lowest since the early 1970s when Freddie Mac began tracking them.
The housing sector faces a small hurdle at the end of September when the size of the loans that Fannie and Freddie, as well as the Federal Housing Administration, can purchase are set to fall back to pre-financial crisis levels.
The so-called conforming loan-limit caps are set to decline from $729,500 in the highest-priced real estate markets to $625,500 on October 1.
Karen Petrou, managing partner of Federal Financial Analytics Inc., in Washington, said the administration's best hope to support housing would be to ramp up the refinancing initiative .
"If there was an easy way out of this, then a solution would be done," Petrou said. "The refinance proposal is the remaining cannon in the arsenal."
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