The 2.0 version of the HARP program is off to a strong start with the nation’s five largest servicers gobbling up applications, HUD secretary Shaun Donovan told a Mortgage Bankers Association gathering Thursday morning.
Roughly 400,000 HARP 2.0 applications have been taken by “five of the biggest servicers that we are tracking,” Donovan said.
The HARP 2.0 program is aimed at refinancing underwater borrowers with Fannie Mae and Freddie Mac loans.
To refinance other underwater borrowers with conventional loans that are not guaranteed by the GSEs, President Obama has proposed a new refinancing program where the FHA would create a new and separate mortgage insurance fund. However, legislative approval would be needed for this effort.
Donovan signaled the administration will make a push in the next few weeks for Congressional approval.
Republican lawmakers are likely to block such a bill, but the HUD secretary expects bi-partisan support. He noted the existing FHA single-family insurance fund will be protected. And the program is targeted at 3 million borrowers who are current on their loans but locked out of refinancing due to negative equity.
Refinancing is a “powerful tool,” Donovan said, and it could save these borrowers $2,500 to $3,000 a year and help stabilize home prices.
In the long run, he expects the refinancing program for non-GSE conventional loans will also benefit FHA’s existing $1 trillion portfolio.
“We believe it is a smart thing for the economy more broadly and for FHA,” Donovan said.
