With the President’s announcement last week about revamping the Home Affordable Refinance Program, there have been a flood of opinion pieces and prognostication as to how exactly this overhaul would help.
The HARP overhaul proposal is recommending that the 125% loan to value limit be lifted to allow more underwater homeowners to take advantage of the record low interest rates available in today’s market.
I don’t often speak out about these Government programs because I kind of fall on the cynical side of the conversation.
Every Government program I’ve seen introduced in the past few years has failed miserably, helping only a very, very small fraction of the folks it was intended to help. And I’m not the only one saying this!
Here’s an interesting statistic that I read on Housing Wire today:
To date, more than 838,000 borrowers have moved through the program, well short of the 4 million to 5 million originally estimated.
I am not surprised by this statistic. This is completely consistent with the effectiveness of every other loan modification and foreclosure prevention program introduced in the past few years.
Diana Olick, of CNBC Realty Check makes this statement:
The President’s proposal, like so many of the government’s housing bailouts, will likely be long in coming and short on results. Furthermore, the refinance proposal is an economic, spending stimulus, not a housing market stimulus. There are still millions of borrowers behind on their mortgages, whom this program would not even address. There are also millions more foreclosures heading to the housing market over the next year which will only lower overall home prices further and put more borrowers in trouble.
I have to say I share this perspective.
I don’t know what the answer is. Actually, I do have some ideas but I think they would be too radical and effective for anyone to take seriously 🙂
I’m keeping a close eye on this. I am not sure if there will be an overhaul of the program, and if there is and overhaul, who’s to say the Government better understands the problem now, and that this would be a solution?
Let’s just wait and see……