HARP ® is most successful refinance progam
harpprogram.org, Copyright: 2014
The government's HARP ® (Home Affordable Refinance Program ®) is head and shoulders above the myriad of letter stamped of government initiatives being used to stem the tide of foreclosures: It's the most successful in actually reaching the goals that prompted its creation.
Almost 3 million homeowners with nearly a third of those owing more than their homes are currently worth have been saved with a HARP ® mortgage. The program targets those with little or no equity in their homes and aims to help those most affected by the mortgage crisis. It didn't get off to a great start but after the government retooled the HARP ® program in 2012 and 2013 it has picked up steam and saved many homes from foreclosure.
"Of everything the government tried to throw at the foreclosure crisis, it ended up being, by far, the most successful thing they did," said Glenn Kelman, chief executive of real-estate brokerage Redfin.
Borrowers refinancing under HARP ® have saved an average of nearly $350 a month. Anyone living check to check and struggling to make their mortgage payments as a result, know how much these savings mean to hard working Americans. HARP ® mortgage activity did dip after interest rates jumped, rising from around 3.6% in May to 4.6% by late June. Still, analysts at Goldman Sachs Group Inc. estimate that some 580,000 borrowers who are eligible could save at least $150 per month by refinancing into a HARP ® mortgage.
The HARP ® mortgage program started to reach more homeowners in 2012 after changes dubbed HARP ® 2.0 , Redfin's Mr. Kelman said he encountered potential home sellers who were "crying a river because they thought they would have to sell short," meaning they'd have to ask for bank approval to sell at a loss. But once some discovered they could refinance, "they went from feeling like the losers in the economy to feeling like the winners," he said. "What once was a source of embarrassment, being underwater, became a source of pride—saving a lot of money."
Despite the recent successes, economists say it's unfortunate it took the program so long to hit its stride. Despite having prevented hundreds of thousands of potential foreclosures with minimal cost to the government, "when we look back on this in 10 years, it's all going to suggest we did too little, too slowly, in housing, and it was too bureaucratic," said Christopher Mayer, a real-estate professor at Columbia Business School who was an early advocate of a refinancing program. "We left an enormous amount of benefit on the table."
Top officials in Washington have expressed support to industry officials for moving the June 2009 cutoff to 2010 for HARP ® mortgages instead to allow more homeowners to qualify. That decision lies with the Federal Housing Finance Agency, though the independent regulator for Fannie and Freddie. Rep. Mel Watt (D., N.C.), hasn't said anything publicly on these ideas or made any formal plans regarding this change.