A U.S. program to help as many as 5 million homeowners refinance their mortgages is being hindered by reluctant lenders, suffering a similar fate to the government’s main foreclosure-prevention effort.
The Obama administration introduced the plan in April 2009 in a bid to prevent defaults among borrowers who were current on their payments but had little or no equity after the average home price had tumbled 33 percent since the July 2006 peak. The Home Affordable Refinance Program, known as HARP, was designed to allow these homeowners, who usually can’t qualify for new loans, to benefit from the lower rates engineered by the Federal Reserve to help stimulate the economy.
About 810,000 homeowners refinanced through HARP as of May, according to the Federal Housing Finance Agency, far short of the administration’s goal. The program’s limited impact threatens to prolong the nation’s foreclosure crisis while keeping billions of dollars out of consumers’ hands -- money that could flow into the economy in the form of additional spending or investment.
“Of all the policy ideas to help the housing market in the very near term, juicing up HARP has the most potential for success,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in an e-mail.
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The Obama administration introduced the plan in April 2009 in a bid to prevent defaults among borrowers who were current on their payments but had little or no equity after the average home price had tumbled 33 percent since the July 2006 peak. The Home Affordable Refinance Program, known as HARP, was designed to allow these homeowners, who usually can’t qualify for new loans, to benefit from the lower rates engineered by the Federal Reserve to help stimulate the economy.
About 810,000 homeowners refinanced through HARP as of May, according to the Federal Housing Finance Agency, far short of the administration’s goal. The program’s limited impact threatens to prolong the nation’s foreclosure crisis while keeping billions of dollars out of consumers’ hands -- money that could flow into the economy in the form of additional spending or investment.
“Of all the policy ideas to help the housing market in the very near term, juicing up HARP has the most potential for success,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in an e-mail.
The program is open to borrowers with loans owned or backed by Fannie Mae or Freddie Mac and who have equity ranging from negative 25 percent of their home’s value to positive 20 percent. Negative equity, known as being underwater, is when the mortgage is bigger than the value of the property.
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