The plan couldn't come any sooner to homeowners who have been blocked from taking advantage of the lowest mortgage rates in half-a-century. To date, less than a million underwater borrowers have been able to turn in their old loans for new, less expensive ones under the Home Affordable Refinance Program (HARP).
Asking the mortgage industry to commit resources to the effort, Donovan said the White House is engaged in "intensive discussions" with the Federal Housing Finance Agency and others to lower barriers to refinancing and increase the program's reach. "We need to pick up the pace," he said, speaking Tuesday at the MBA convention in Chicago.
On another timing issue, the HUD Secretary noted that a new Making Home Affordable requirement will "set the standard" in providing robust assistance to out-of-work borrowers.
Under that rule, servicers that handle government-insured loans or participate in HAMP, the Administration's main program to help people avoid foreclosure, must give unemployed borrowers a minimum of 12 months to catch up on payments while they are looking for work.
With 60% of the unemployed out of work for more than three months, and 45% out of a job for more than six months, "it is critical that forbearance programs be in line with how long it takes" for people to find work, he told the MBA.
At the same time, though, Sec. Donovan indicated it would be several more months before any new ideas for moving the 250,000 foreclosed properties currently on the books at the FHA and the government-sponsored enterprises will be floated.
In August, HUD joined with the GSE's overseer, the Federal Housing Finance Agency, and the Treasury Department in a "Request for Information" in hopes of generating ways for absorbing excess inventory and stabilizing housing prices.
The response was overwhelming, "which tells me that the private sector is ready to engage in a meaningful way to reduce the overhang," the secretary said. "We're reviewing those ideas now, and in the coming months, we will be developing a proposal that puts the best ones we've received to work."