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Obama Answered My Question About HARP 3


This week has been all about Obama, at least on this blog. The President has been making the rounds, visiting multiple locations on the West Coast to discuss the state of the economy, housing, and of course, mortgages.

After a speaking engagement in Phoenix, which I detailed here, he met up with Zillow CEO Spencer Rascoff for some housing Q&A with everyday homeowners, renters, and prospective buyers.

I was lucky enough to get one of my questions asked on air by Rascoff, which I submitted via Twitter.

Here’s what I wrote:

What’s happening with #MyRefi or #HARP3? Is there any hope of such a program?

Some Background on HARP

I’ve been following the Home Affordable Refinance Program (HARP) since it was originally announced back in 2009, and have subsequently covered changes and proposed modifications since then.

When it was first released, the max LTV under the program was just 105%, which didn’t provide much relief for underwater homeowners, especially seeing that most were nowhere close to having LTVs that low.

Later, HARP was expanded to allow for LTVs up to 125%, though that too didn’t appear to be enough to spark the interest of most homeowners.

Finally, HARP got a real shot in the arm when it was announced that there would be no maximum LTV, essentially allowing anyone with a Fannie- or Freddie-backed mortgage to refinance.

Still, the industry has asked for more, including reHARPing, which would allow a homeowner to refinance more than once under the program.

Additionally, there have been multiple pleas to include borrowers whose loans are not backed by Fannie and Freddie, private-label loans that are certainly problematic.

There have also been calls to extend the eligibility date for a HARP refinance, which is currently limited to those who obtained their mortgages before May 31, 2009.

Unfortunately, there hasn’t been much movement since the LTV threshold was removed, despite Obama’s continued support of such a plan.

In fact, months ago the White House launched the #MyRefi campaign to garner support, though Congress hasn’t acted yet.

What Obama Said

[youtube id=”pe7IxWAf784″ width=”600″ height=”350″]

Anyway, Obama said the following about the possibility of HARP 3 (at around 7:30 in the video):

I think there should be hope. Keep in mind that this is a program that not only I put forward and supported and talked about during the State of the Union, but this was an idea that was strongly supported by Mitt Romney’s chief economic advisor. So there shouldn’t be an ideological barrier to getting this done. This should be something that Democrats and Republics can come together and get done.

Now, Congress, I think all of us recognize, has been a little broken lately. But the good news is, is that there are Republican and Democratic senators, at least, who have been in a conversation about how do we learn the lessons of the past and start building a firmer foundation for housing going forward. And a lot of the concerns, a lot of the questions had to do with how do we get Fannie and Freddie reformed so that they are not in a situation in which taxpayers are essentially subsidizing huge risks that they’re taking.

As part of a package, you could see Fannie and Freddie reform that protects taxpayers, puts housing on a more stable footing, but in the interim also provides some immediate relief to homeowners, giving them a chance to refinance while interest rates are still low.

So this is something that I’m going to push again once Congress gets back in September, once they’re back in session. As part of a broader package of housing reform, let’s see if we can potentially even get this done before the end of the year.

In other words, the door isn’t shut on more HARP revisions and expansions, despite prospects appearing so bleak lately (now that the housing market is back on seemingly solid ground)

It sounds like some sort of HARP expansion, whether it’s HARP 3 or HARP 2.5, could come with impending housing reform. Obama makes it clear that he is for more assistance, but that Congress, which he refers to as “broken,” must act.

The worry though is that as more time goes on, mortgage rates face a greater risk of rising, thus reducing the benefit of a refinance for more homeowners. There’s even a study that backs this up.

So if they do actually want to expand HARP, they should do it quickly. For the record, Obama also noted in the Zillow Q&A that he hadn’t refinanced himself, despite having an interest rate in the mid-5% range.

When asked why, he said, “When you’re President, you have to be a little careful about these transactions, so we haven’t refinanced.”

Perhaps he doesn’t want to provide all his sensitive financial documents to a lender, or see his credit score leaked to the general public.

Read more: I answer your commonly asked mortgage questions without any slant.

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